18.4.2019 HCP Team

Ethical investments – the trend and analysis, Part 2

Ethical investments – the trend and analysis, Part 1
Teal organisation model: self-management, wholeness at work, and evolutionary purpose
Authors Ernst Grönblom & Jo Iwasaki

Authors Ernst Grönblom & Jo Iwasaki

Today so-called ethical investments are very much in fashion. However, this trend comes with its own set of challenges. In the second part of this blog series, we talk about what integrity means.

Putting one’s own house in order

This is a well-known story about Mahatma Gandhi. It is probably just a legend. But it illustrates the ethical challenge the financial industry faces beautifully.

There was a woman in India who was upset that her son was eating too much sugar. No matter how much she chided him, he continued to satisfy his sweet tooth. Totally frustrated, she decided to take her son to see his great hero, Mahatma Gandhi.

She approached the great leader respectfully and said; “Sir, my son eats too much sugar. It is not good for his health. Would you please advise him to stop eating it?”

Gandhi listened to the woman carefully, but only said; “Go home and come back in two weeks.”

The woman was perplexed and wondered why he had not told the boy to stop eating sugar. Anyway, she took the boy by the hand and went home.

Two weeks later she returned, taking the boy by the hand. Gandhi motioned for them to come forward. He looked directly at the boy and said; “Boy, you should stop eating sugar. It is not good for your health.”

The boy nodded and promised he would stop this bad habit.
The boy’s mother turned to Gandhi and asked; “Why didn’t you tell him that two weeks ago when I brought him here to see you the first time?”Gandhi replied; “Two weeks ago I was eating sugar myself.”

The moral of the story is that Gandhi lived in such integrity. He would not allow himself to give advice unless he was living by it himself.

Today, so-called ethical investments are in vogue. Customers ask for them: in response, banks and fund managers offer some sort of “ethical funds” or “impact investments”. It looks very much like a question of demand followed by supply.

In some ways, it’s a good thing. People are becoming interested in the role investment plays in making the world a better place.

But what if those who offer such services are not living up to the ethical standards that they demand from others? What if they have engaged themselves in practices less than respectable.

Regulations following the Financial crisis is slow coming. It is only 2018 MiFID II came into effect, aiming to increase transparency and customer protection.  With or without regulations, shouldn’t one put one’s house in order first, before telling others to do so?

This is the core of the HCP concept of distinguishing between “internal responsibility” and “external responsibility”.

In our view, there is a little point in telling others to clean up their act unless we have done so ourselves. Otherwise, we shouldn’t be judging others. One must stop eating sugar before telling others to do so.

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Good asset management is indisputable investment expertise, respect for customers and transparent pricing. This is not all for HCP. A healthier financial sector, better financial service, and support for individuals – this is what we believe in and work for.

Ethical investments – the trend and analysis, Part 1
Teal organisation model: self-management, wholeness at work, and evolutionary purpose
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Comment (1)

  1. Mirja

    I don’t fully agree. I think raising awareness does not necessarily mean that you already live up to all the ethical standards you value. I like to think that we can admit that we are incomplete but supoorting each other we can try to improve. It’s fine to get there first but would it not be possible to get there with others? If we make the standards of ethical being too high, could there be a possibility that our integrity is not quite real?

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