Appendix IV
The Ethics of Investment
The chapter of Caleruega asked that each province to agree upon the ethical norms it would follow when investing in companies or depositing money in banks (149). We present the following points as a guide for provinces in drawing up a set of norms appropriate to their own circumstances.
The Ethical Basis for Investment
1. Given that the management of a productive economy depends upon making use of resources obtained in the past, those who make available these resources - usually a certain sum of money - for the use of others are entitled to a share - in the form of interest or dividends - in what the other has produced.
Assessing Large Institutions
2. Here we refer to investment in large institutions: corporations, governments, banks and financial institutions. In their operations such institutions have resources to span vast distances and operate in the long term; hence we have to think in terms of corporate or structural morality. In dealing with certain structures we have to examine especially the conditions of action, often hitherto unforeseen, and the no less common and integral consequences of action. In the large part, these integral consequences may go well beyond the views and intentions of people working in the organisation.
For instance, the ethics of whether one may invest in a pharmaceutical company depends upon
the quality of its actions - do its drugs have good therapeutic effects?
the conditions for action - who needs them and out of this need will buy them?
and the consequences of using them - what are the medical side effects, personal repercussions, and social effects that result from using them.It is especially important to pay attention to the last two points when companies extend their operations from one part of the world to others where the social conditions are different.
How are we to respond?
3. In dealing with large institutions one needs an institutional response, that is, co-operation is needed with other religious orders and conferences of religious, dioceses, bishops' conferences, trade unions, consumer organisations, and other groups concerned with health, environment and education. This co-operation is required to a) have sufficient resources to know what is happening, b) to make a significant economic impact and c) to claim legitimacy for one's stand.
4. Some things to keep in mind regarding these corporations:
4.1 employment practices - whether they pay a just wage, offer good working conditions, offer sufficient benefits to their employees and care for their safety;
4.2 their involvement in producing armaments or dangerous or toxic substances, at least without sufficient safeguards;
4.3 the impact of their activities upon the environment;
4.4 their impact and co-operation with the local population where the corporation is located, including social responsibility initiatives (are these cosmetic or really beneficial?);
4.5 their long-term concern for their shareholders, including purchasers, partners and sub-contractors;
4.6 any operations in politically sensitive regions (do these directly or indirectly aid oppression?);
4.7 whether they are dedicated to bio-technology, genetic-engineering and the patenting of genetic manipulations (what are the biological consequences and the economic consequences?).
5. Areas of special concern regarding banks and financial institutions:
5.1 their commitment to lessening the gap between rich and poor, both locally and globally;
5.2 their degree of responsibility in speculative financial transactions that easily destabilise currencies and, as a consequence, people's livelihoods.
Further reflections
6. In many of these areas there are no clear-cut answers, except in extreme cases, and one must learn from one's own mistakes. The situation is constantly changing; a corporation may diversify into new ventures that have positive effects or harmful consequences. Hence, the above points do not dictate rules, but help us to reach a prudent judgement. Generally, it is best if investments are made at a provincial level, with the economic council regularly monitoring both their financial viability and ethical integrity. As it gains experience, the economic council will be better able to identify the various moral issues involved.
7. It is important that banks, corporations, etc know that we are concerned by asking them questions and conducting investigations in such a manner that they consider things other than purely market forces. As a consequence, provinces can use the leverage of their investments and public standing to put pressure on the company in shareholder resolutions and meetings of the company; although opportunities for this vary from country to country.
8. A portion of our investments can be placed in development programmes for the poor; for instance, in funds that offer guarantees to banks so that people may secure loans to build their houses or start small enterprises.
9. Given that it is impossible to attend every ethical issue in the whole field of economics, it may be useful for a province to start by identifying two or three glaring injustices and investigating which companies profit from them in order to be able to take whatever steps it can neither to support nor profit from these injustices. Examples may be those companies making substantial profits from selling abortifacients, running sweat shops, or promoting substance abuse and addiction among the young.
Summary
10. Our overall point is to work so that the use of the vast resources and control of time and space that is the hands of giant institutions be oriented towards the building up of a more human and healthy economy for ordinary households. This runs against much of the trend today, where in order to maintain a growing global economy, the livelihood and human well-being of many households is sacrificed.
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