The launch of FTSE4Good series of ethical indices indicates a great shift in the attitude of investors towards companies and investment criteria. The move is an important step towards bringing ethics and businesses together, the criticism of the criteria notwithstanding.
For years, in fact for ages, business and ethics have always been considered as the opposites. The general perception and in most cases rightly so, remained that profits and purity do not go together. The path to wealth is not exactly a sacred one. One should consider oneself lucky, if one had achieved it within the ethical limits. However, today most of the affluent nations, and their conscious investors are questioning this basic assumption. Gone are the days when an investor would give his money to a bank or a fund manager and sit back enjoying the returns. Today, investors increasingly have reservations as to where their investments should flow in and where not.
For instance, most people do not want their money to go into companies and industries that are harmful to the environment. Investors are increasingly aware of their rights to express their preferences as to where their valuable savings are to be invested. The attitude that emphasizes the means as important as the goals (returns) is becoming increasingly visible.
John Nisbett in his book, Megatrends in the 1980s predicted that people would use their money to force the acceptance and the adherence to their value systems. That prediction is fast becoming a reality today. The launch of the FTSE4Good indices, the ethical indices of FTSE, is a proclamation of the increasing significance of ethics in business operations today. Investor awareness and company's willingness with regard to the ethical and socially responsible factors has been on the rise. The idea is praiseworthy, in fact `noble' that ethical companies should be given the boost but the issue is much deeper than what comes out at the first glance. First, comes the question of judgement. How should one judge which company is ethical and which is not? In fact, what is `ethical', what are the parameters that are to be applied to judge this very sensitive and highly subjective aspect? What are the criteria that would objectively come to a consensus as to what is ethically desirable and what is not? These few dark areas have been hovering around the minds of investors for long. FTSE's move has come up with some solutions to these particular issues to begin with and it has kept itself open to any improvements that might take place over time.
|
