Eco-responsibility is good business
By Richard Davis
Research Executive Officer
The Public Questions Committee
Recent debates in the pages of Crosslink have highlighted an important issue that has dogged the church for years. It is whether there is trade off between money and ethics. Does being ethical cost us money, and does seeking money cost us our ethics? Certainly the church needs both money and a commitment to ethical standards, but this is not the trade off that some would make it appear. This is particularly so in the field of investments.
There is a growing body of evidence that investors need not make such a trade off. In one study Stephen Erfle and Michael J. Fratantuono, both professors of Economics, tested the belief that having a good environmental record was costly to business and lowered profits and returns. They began by selecting 8 economic measures commonly used to determine how well a business is doing. They compared those rankings against the companies’ environmental standings. To their surprise, the top-ranked environmental companies outperformed the bottom-ranked companies on all 8 commercial measures. It appeared that having good environmental practices and programs had no negative impact on the bottom line, and in some cases might even improve corporate performance.
Ethical business can reduce risk for investors through not engaging in socially harmful activity, thus eliminating or minimising the threat of expensive law suits and fines from regulators. There is also a growing consumer awareness of environmental and social issues. Many consumers are therefore shifting their purchasing power to the products of ethical producers, making these companies more profitable.
Both the Methodist and Presbyterian Churches have signed up to ideas of ethical investment
However, the guidelines agreed by Conference and Assembly are now dated and refer mainly to the traditional moral worries of the churches, such as tobacco, alcohol and gambling. There are now superior standards that better reflect the growth in understating of these issues. A good example of such a standard is that developed by a coalition of ecumenical organisations working on corporate responsibility: ‘Principles for Global Corporate Responsibility: Bench Marks for Measuring Business Performance’. The adoption and implementation of these principles, or something similar, by the Churches’ investment bodies would mean that the Churches would be at the forefront of ethical investment thinking, and could even increase their investment returns.
Copies of the Bench Marks document are available from the PQ Office, PO Box 9049, Wellington. The Public Questions website has several resources and links on ethical investment. Take a look at www.socialissues.godzone.net.nz/links2/pages/Issues/Economics/Ethical_Investing/
The opinions expressed here do not necessarily represent those of The Public Questions Committee