An interesting trend is emerging in Europe, and around the world, with the demand for an ethical index to measure the moral way companies are doing business. Christopher Elias writes about this in a post on Westlaw Business Currents titled “Corporate Social Responsibility: Ethics in the Age of Goldman.”
Elias says it’s not just about Goldman, Morgan Stanley and others, in terms of a “perception that financial institutions’ rampant pursuit of profit runs roughshod over ethical and moral values.” He says that factor, “together with fears of global warming is spawning a whole universe of ethical indices that is driving companies to be more socially conscious and allowing funds and investors to passively invest in ethically-minded companies.”
So why would a company want to be included in an ethical index?
Elias writes:
Part of the justification behind ethical indices is that they can encourage corporate responsibility by identifying companies that fall within and outside of set ethical parameters. The theory being that those companies outside of set parameters will adjust their behaviour to gain inclusion in the index.
Elias says that as “the ethical investment fund industry has grown, investors have been presented with an ever growing array of ethical investment options. Investors can modify their investment options depending on whether religious, ethical or environmental concerns are paramount in their minds.”
Yet, he writes, it might be difficult to measure the true impact of the change that ethical funds bring to the business community.
You can read the full post on Westlaw Business Currents.
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