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December 12, 2008

Investing Returns: Virtue vs. Sin

by Ron Robins, MBA*

An editorial from my globally popular ethical investing website, Investing for the Soul 

I was recently asked to appear on a major business television programme to makethe case for the virtuous, ethical investor. And an opponent was to appear to make

their case for ‘sin’ investing. Unfortunately, the debate never occurred as the fellow

who was to defend sin investing could not be pinned down for a show time.

However, thinking about the show spurred me to examine this subject and as to whyI feel so strongly that the future belongs to the ethical, and shall I say, virtuous

investor.

Of course the definitions of what actions are virtuous or sinful vary widely. But, forthe sake of simplicity, I believe that what clearly enriches and enhances life is

virtuous and that which creates death, suffering, and harms society, is sinful.

Tobacco—the classic sin industryConsider the case of tobacco. In the past, tobacco was often considered a good

stress reliever. In fact, that is still how it is sold today in some parts of the world.

Not long ago tobacco supporters reasoned that society benefits financially from itsuse. Smokers pay a lot more in taxes, and since they die earlier, do not make as big

a drain on health care costs as someone living a longer life. Today though, we knowthe toll of this product on human life and its costs to society are immense. And

therefore most countries are making substantial efforts to curb its use.

So even though tobacco companies continue to increase their profits, pay handsomedividends, and have held up well in these difficult markets, their future remains

bleak.

Ethical investors consider wider effects of investing

Ethical investors mainly want two things. Firstly, they invest for profit. Secondly,

they want their investments to create a holistically beneficial environment forthemselves, their family, community and society.

Furthermore, ethical investors understand that when they invest in a company, (or

many companies such as in a mutual fund, unit trust, ETF, etc.), they share in the

responsibility for the activities of those companies as well as participate in theoutcomes of corporate actions. Thus, their personal and spiritual development can beaffected by what they invest in.

Investing returns

And concerning investing returns, most long-term ethical and socially responsibleinvesting (SRI) studies generally conclude that there is no significant difference when

compared to investing conventionally. Some actually show that you might do evenbetter when applying your personal values to investing.

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