Movement 123

investing ethically
can you apply christian principles in a capitalist system?
Margaret Thatcher once famously remarked that
the Good Samaritan not only had good intentions
but he also had money. While that is hardly the
main message that that particular parable has to
convey, it does force the reader to ask what should
be done with any wealth that might be accumulated,
which in turn forces you to ask how that wealth
may be accumulated. The parable of the ten talents
also makes us question the role of money, how we
get it, and what we do with it.
The fact that you are reading this magazine would
indicate that you have a Christian ethic, but I also
appreciate that a number of you might object to
the injustices (apparent or real) of the capitalist system.
However, whether you agree with it or not,
the United Kingdom is a capitalist economy, and
wherever you put your money, it is in one way or
another involved in that global system of international
finance. That is a fact of life which not even
keeping your money under the bed can detach you
from. From a purely ethical point of view, there
is no difference at all between putting money in
a bank, and putting money into the stock market.
With both, the money could well end up financing
a company you would rather not support, or be lent
to a government whose policies you are actively
fighting against.
Therefore, when deciding where to put your money,
it is essential to ask whether that money will be
used in accordance with your principles.
Many articles have been written about consuming
ethically - fairtrade goods being sold in church;
boycotting companies such as McDonalds, etc.
- but less has been written about the ethics of investing.
The very first question to ask is actually nothing at
all to do with ethics. Rather, it is connected with 'attitude
to risk'. The amount of risk you are prepared
to take will determine in which particular 'asset
class' you put your money. (Risk can essentially be
described as how much you are willing to see the
value of your money go down in the short term in
the hope that it will go up by a greater amount in
the long term - the more risk, the greater the potential
reward, though this is not guaranteed.)
The lowest-risk 'asset' would be cash held in the
bank, but over a long period of time, the money
would barely hold its value against inflation. The
higher risk 'assets', such as bonds, property or
shares, might give a greater return over the long
term, but in the short term the value of your investment
might go down.
lf you give your money to a bank or investment manager,
he or she will then invest in other companies.
Through this, it is possible for you to benefit from
the growth of the company. Of course, you may not
want to invest in certain types of companies, such
as oil stocks, or you may wish to proactively support
companies with a good record with regard to
the environment or so on.
a fund manager very often will
have far more influence over a
company than a protester
The fund managers, because they own a significant
share holding in the company, can and do advocate
changes to business practice which end up being
good for the business, good for the environment,
and good for the investor. By talking to the chief
executive officer at an annual general meeting, a
fund manager very often will have far more influence
over a company than a protester outside that
meeting. The more investors in a unit trust which is
operating along ethical lines, the greater that influence
will be.
Within the current UK investment market, it is relatively
easy to do this. There are over 50 retail 'unit
trusts' such as the ones offered by fund manager
F&C, and several banks, such as Smile, in which
you could invest and relax in the knowledge that
your money is working for you while also making a
difference to the world. Also, the 'FTSE4Good' index
gives a good yardstick as to which companies
meet certain agreed ethical standards.
One of the beauties of ethical investing is that it can
still make you money (which, of course you can
then, like the Cood Samaritan, use to help those
without). For example, over the year to 1 March
2005, the average performing ethical fund would
have made you 11.05%, while the best one would
have made you nearly 20"h. Financial advice is important
in choosing the fund though, as the worst
performing fund would have made 1ust2.13oh.
It must not be forgotten that any investment is
just that - an investment - and you could lose
your money. lt is therefore essential that you
speak to an independent financial adviser
(lFA) about your needs and the risks involved,
and also that you make sure your
IFA is aware of the ethical requirements
you have.
Christianity's view towards money is that
it is morally neutral - how you get it, and
what you do with it once you have got
it, is what determines where you stand
on the scale of Christian morality. I
This article
is published
posthumously
as Richard
Nagle tragically
died on 16
October 2005
aged 30.
Richard was
at the time of
writing this
article an
lndependent
Financial
Advisor with
The Annuity
Bureau, and a
member of the
Stewardship
Committee
at Southwark
Cathedral.
movement