Is supporting ethical investing Socialist?

I thought I'd do a blog post about the idea that ethical investing was anti-capitalist or  somehow socialist.

In theory, if Ethical Investing supported companies that ONLY operated based on doing good things for citizens without any concern for revenue and profitability, then yes, you could say it was anti-capitalist. We've also heard legendary investors say things to the effect that it is difficult to serve "two masters," referring to choosing profitability or always doing the right thing. 

Neither of these is true in my opinion. First, public companies don't do things without an eye on growth of revenue. Say what you will about tech companies that ignore profitability, they still almost always have an eye on growth of revenue, and/or users which leads to more revenue down the road. None act exclusively from an altruistic perspective. So no investment in public companies is anti-capitalist.

Second, it is not hard to serve "two masters." When CEOs make strategic decisions, they should almost always factor in the ethics of the decision, because the public's response to their ethical or unethical choice will usually play into revenues. For example, when a company is thinking of building a new plant, and they have the option of building sustainably or in a way that can negatively impacts local population for less money, the CEO and board must consider whether paying less is worth the negative publicity and potential boycott. So serving two masters must always be considered now, because the public is more sensitive to companies decisions than ever before. 

So this argument comes down to whether you believe CEOs can make decisions without paying the price from a more informed, opinionated public. I would say that now it is absolutely necessary for companies to make decisions with public opinion in mind. So regardless of whether the CEO is ethical or not, it is the investors and public that force them to act ethically. 

However, it is still necessary for investors using socially responsible investing aka ethical investing as methodology to screen for the companies that don't get it. They have to screen for companies that don't understand how the public thinks now, or that are in industries so ingrained in unethical functions (think Big Oil) that it is impossible for them to conform to ethical standards. 

In the end, all we -- as ethical (company) investors -- want is a corporation that has a Corporate Code of Ethics that inform its behavior. That way decision makers at the company can avoid making bad actions. We still want the same level of focus on revenue growth and profitability, but if there is a decision that would violate the Code of Ethics, the company would not execute it.

And there will always be differences in what the public deems ethical behavior, and that is fine. We can only operate within out ethical framework to seek out good investments.