The Ethical Investor

The Ethical Investor 1

 

Recently a book was published, titled ‘The Ethical Investor’ which talks about investors that only invest in projects that provides specific and certain identified ethical standards which we will explain later on.

The author discusses with the individual investor and provides numbers and documented statistics how to invest their money in successful projects, at the same time serve in their communities’ development and growth, the author also shows statistically the benefits that were brought on the stakeholders that are cautious about their investment money in projects that has public service as its main goal and purpose of existence.

 

Examples and profs that was brought by the author is that, in the past years between 1989 and 1999 in Britain alone, investing in company stocks that fall under those criteria’s increased substantially from 200 million pounds to over 2 billion pounds, and the most important fact is the growth levels in those stocks have increased at a 100% rate of stock value over 3 years between 1996 and 1999.

 

And during the end of last century those stocks did better than all the others that do not fall under ethical standards or levels that was also explained by the author in many points we can mention few examples from , like:

–          Projects that provide basic community services to promote for better upbringing, educational, social and health development.

–          Projects that are aimed to preserve natural resources, and find substitutes that can help protecting the environment (from water, air and food) from pollution, vandalism, draining and misusing them.

–          Projects that provide new and honest job opportunities that are assigned to help developing the people not destroying and enslaving them.

–          Staying clear from all projects that are not aimed towards accomplishing the above interests.

 

The author begins with analyzing a definition that unfortunately became part of the mentality and psychology of the majority of the people in this century and that is controlled by capitalism, that is when individuals do things with the base goal of bringing goodness and benefit to others, they have to sacrifice their own interests.

 

The author confirms that this definition is wrong and is declined by scientific and accurate studies in the history of those investments and the statistics and numbers that is not argumentative, and I join my voice with his voice and say that: this definition is a wrong and is alien to us, as a nation with a long history in bringing the best interest of individuals during and as a result of his service toward his community, and their history filled with role models in investing towards the goodness, best interest and well being of the people, thus being more blessed and more rich.

 

And the truth is, this wrong definition is a result of lack of insight in evaluating projects and investments, companies priorities became based on profit increase in the short term, even if it has negative consequences on the long term.

 

 

The Ethical Investor 2:

 

I began in my previous article to analyze a recent published book titled ‘The Ethical Investor’ that proved with documented statistics and numbers the preferences of investing what falls under the category of ‘Ethical Investment”, I have mentioned some of them as an example, like projects that provide basic public service to the community and preserves natural resources, protecting the environment and providing new and honest job opportunities, focused on building the individuals mental, physical and psychological health.

 

It may seem from initial reads to the subject that every work and investment is actually ethical, but the author explains that this is not true, as there are priorities and needs that are different from one community to another and those priorities and needs differentiate between investments. And here we do not speak about unethical investments such as investing in things that has obvious damages in their different varieties, but we speak of investments that may hold unobvious damages, but does not help in lifting up the individuals’ status in the community scientifically, socially, upbringing or health wise, and that it does not protect the environment and does not preserve the community’s energy, and that is why the author listen what is called ‘Socially concerned investor’ under the definition of ethical investment, and made it as one of the conditions to complete and fulfill the meaning of Ethical Investment. Concerned investors are the ones who carry their communities concerns on them self to serve their communities and pursuit their progress and development are their main concerns. For example, if fast food chains spread in a certain community, and there is a shortage in programs that helps growing the individuals mind, body and soul, investing in fast food does not become a priority in this community; forget what this food cause of diseases affecting the body on the long run, due to its poor quality and not taking into account the basic principles of healthy foods, unless rarely.

 

The author confirms that individual investment in ‘Unethical projects’ that are aimed to service the community, is not actually a sacrifice for a far future, unknown, but it is an investment that has all elements that are available in other short term projects that acknowledges those principals. And the difference is that unethical projects are meant to serve the community, its growth and wellbeing. Its survival is guaranteed by the survival of the community, but short term projects that does not give much consideration to those principals, their survival is connected with the circumstances of its control and the change of those circumstances (such as the spread of public awareness or the growth of educational levels of the individual in a community…etc) which forces those projects to fade away.

 

The author markets a lot of evidences that support the preference of investing in projects that obtains the mentioned terms and conditions. One of those examples is the story of a communications company in the U.K called BT which is topping the communications market at that time, due to the embracement of those definitions and concepts of ethical and social standards, and what positive effects did it have on the overall production, success and advancement of the company.

 

 

 

The Ethical Investor 3

 

Today we continue analyzing ‘The Ethical Investor’ book which presented proofs that included documented numbers and statistics that has an advantage of investing what falls under the category of ‘Ethical Investments’. Such as investing in projects that provide basic services to the community that preserves natural resources and protects the environment, while helping to build the individuals mentally, physically and psychology. We spoke about the ‘Socially concerned investor’ which was made by the author as one of the conditions to complete and fulfill the definition of Ethical Investment, and that this interest drives the investor to search from priorities in his community’s needs to invest in them, and those priorities are the ones differentiating between investments.

 

From the examples and proofs led by the author to support and prove the preference in investing with ethical projects that has the community as its concern was a company called BT for communications in U.K which topped the charts in its industry, due to its comprehension and embracement of the ethical and social concepts and standards to accomplish advancement and success. Examples of how they made sure and showed concerned about protecting the environment by using material that can be recycled to be benefited from and use in manufacturing most of their products such as called cards and others. Another example how BT realized the importance of humane and proper treatment for its employees. Such treatment encourages employees to give correct and bright ideas that help development and fast growth. Adding that this kind of treatment creates some kind of loyalty for employees and the want to settle down on long term bases with the company, which results the overall turnover number of employees, and decreasing the cost of new employee training and directing savings for additional training workshops to provide growth for employee performance in general, this kind of investment in the workforce is considered the most important factor to succeed in any business.

 

Measure with that the ethical dealing with suppliers, consumers…etc. Ethical dealing with consumer’s results in creating solid loyalty by consumers on the long run, which results in easing the financial burdens specified to solve and take out negative impressions about the company and assign the same finances to work in creating positive impressions and helps speeding up the growth and advancement of the company.

 

The Ethical Investor 5

 

We continue our subject today about ‘The Ethical Investor’ book, which the author has proved with documented numbers and statistics the preference of investing what falls under the category and definition of ethical investment, which we elaborated and discussed in details about in previous episodes, we also have mentioned some investments in projects that provide basic services to the community and preserves natural resources, protecting the environment and helps in the overall development of individuals mentally, physically and psychologically, we also spoke about the ‘Socially concerned investor, which was made as one of the conditions to complete and fulfill the definition of ethical investment by the author: This interest in the community involves the investor to search for priorities and needs longed by his community to invest in, and those priorities are the differentiation between investments.

 

A true Muslim would embrace a divine look in judging their matters, including their investment decisions, which proves its preference and higher purpose above all other in what it holds from ethics and divine principals to build their communities.

 

Throughout the past 2 decades our region has known richness that many nations would never witness over all those years, this era has made a boom producing a category of wealthy people, those wealthy people should live up to the coming stage, which will be one of the most difficult stages passing on us, both individually and groups, from duties and rights to their communities, and to care to work towards reviving investment projects that are beneficial to the individuals of a community, not as a good gesture by the rich, but as a right to their communities on them which they earned their wealth from.

 

Knowing that Saudi Arabia investments outside exceed 500 billion dollars (Arab news / 25 Jun 1999) and Arab countries investments outside exceed 850 billion dollars (Saudi Economic survey / 17 Dec 1997) we would realize how influential our economical power on the world, which can be used to purpose of reviving and benefiting our communities.

 

 

The Ethical Investor 6

 

We continue our subject about ethical investment which we have discussed about in the book ‘The Ethical Investor’ which proved with documented numbers and statistics the preference of investing what goes under the category of Ethical Investments that includes building individuals mentally, psychologically, financially and socially. The book also mentioned BT Communications Company in U.K and how it realized the importance of humane and just treatment towards its employees, and we have explained what building an individual and a workforce can have various positive effects from motivating employees to have better judgment and bright ideas inspired from the work field, and show signs of loyalty and devotion to the company they work at, bringing up levels of performance, speed, advancement and growth.

Many companies in the western world realized the importance of what was mentioned earlier, and thus you find them providing their employees stock options, providing them priority, preference and the necessary facilities to even buy more shares, and that’s how the employee makes sure to work for the success of his company, and how not, since he became a real part of it.

I do not find it strange how the west applied those ethical principals in building the working individual, even in a bigger and a better spread and application that what Muslim societies accomplished, although their religion promotes establishing those principals, not only that, but you’d find many wealthy and company owners still thinks and process in a backwards management style when it comes to individuals from workers and employees, similar to ruling slaves, firing who they want, when they want, with no consideration or viable excuse, but also some of them consider elements of success is to assign surveillance techniques and rule with an iron grip with anyone who makes a mistake or carless at work, which plant fear of mistakes and punishment by employees, becoming more paralyzed and unable to function, never dare to say their opinion or have constructively criticize to try and fine new solutions, reaching to a state or carelessness  as long as they are being paid the salary at the end of each month, and then business owners wonder: why their companies are not growing like western and American companies with budgets worth some countries budgets, even more?

A living example is what happened in October 1999 when an American telecommunications company (MCI) bought another telecommunications company (Sprint) with 108 billion dollars to form a new company for communications, and still this new formed company comes 3^rd in size.

I recall a story from one of my professors in medical school at Harvard, one of the pioneers in medical research and occupied a high managerial position in Harvard’s medical school.

Professor Arkey said that 4 decades ago after he graduated from high school with 3 of his colleagues from Ney York, they started looking for a temporary job to help them continue their university studies, he and one of his colleagues succeeded in getting a job at a store in Ney York that pays well alongside end of a year reward, but his other 2 colleagues found work outside of New York in a small startup company, at the end of the year we were surprised that they didn’t get any financial rewards, but were given a letter that they didn’t understand what message it holds, one of them was bothered a lot and went to the professors father to complain, since the boy wanted to buy a new hat for his father in Christmas time from his reward.

The company involved in this was the computer company IBM, back then it was a very small company at the beginning of a successful journey, and about the letter presented to the boy, it was stock option in the company, those stocks are worth 10’s of millions of dollars these days, and the boy became of of the richest in New York, and is still one of the biggest investors in IBM who he worked with for more than 40 years.

Yes, the boy could not buy a new hat for his father that Christmas, but he accomplished his father dreams after 30 years and bought him a huge house with a farm his father spent in the last 10 years of his age in.

The wisdom from mentioning the story is to show that it is the right for workers and employees in companies to advance and the company’s advancement, and collect the fruits of success, with this ideology all our companies can grow and prosper.