Ethical Investing continued

In this thread, where I stated there are no companies the NZ Super Fund should not invest in, I was asked:

“Is there anything you don’t feel comfortable with the New Zealand Government investing in?”

Well personally I don’t like them investing in organic farming but that is different to me saying they should be banned from doing so.There is a difference between what you approve of and whether you should ban it.

The fact is 95% of the world’s companies would be viewed as unethical by someone. That is why legality is a better basis.

Personally I doubt I would personally ever buy shares in a tobacco company. My conscience wouldn’t sit comfortably with it. But I don’t want to impose my views on the NZ Super Fund.

Another commenter said the Super Fund should take account of corporate governance and reporting standards, holding Enron up as an example.

I absolutely agree corporate governance is vitally important, and should be part of a decision whether to invest, as it affects performance.

The issue of reporting is more complex. Enron for example signed up to all the hoop-la about triple bottom line reporting and produces many reports showing how wonderful they were and what good corporate citizens they were.

One of the things I have learned from courses run by the Institute of Directors, is that almost the only report you should believe is the cashflow statement. The statement of earnings and statement of financial position can be easily changed by reclassifying expenses as assets etc. Trust the cashflow – it does not lie.