I got interested in ethical investing some forty years ago as I believed that when we invest in a company we share in the responsibility for the activities of the company as well as participate in the outcomes of the company’s activities. Therefore anyone valuing their personal or spiritual growth has to take these things into account when investing.

I also believe that if everyone does invest according to their personal values, then, since so many of core values are alike — and are supportive of higher ideals — that in the long run, only companies employing these higher values will truly prosper.

If you boycott a stock like Exxon, you are artificially depressing the price a little bit, which means that someone else who buys the stock instead, and doesn’t have your compunctions, makes even more profit. There is no feedback mechanism for Exxon to connect your personal boycott with their actions, so in practical terms all you are doing is denying yourself some investment income.

It seems far more effective to buy the stock, then use the profits in an ethical way — support the companies, non-profits, and charities that further your aims. Think about the irony of cashing your Exxon dividend check and donating it all to Greenpeace (or whatever your favorite example of good and evil is).

There’s also the practical concern that none of the social funds I’ve seen use screening criteria I’m satisfied with, and they seem to take companies’ statements at face value without any sort of investigation into what really goes on. By contrast, there are transparency mechanisms to see that your donations to non-profits and charities are being used as you intend.

If you’re doing it for emotional reasons that’s one thing. But as an investment strategy I think you should reserve that philosophy for your risky money.

Most of us can probably make a better contribution to a cause we believe in by volunteering and spreading the word.

If you invest in things you think will be successful, you’re more likely to have financial freedom and the ability to help your favorite cause. I’m not saying invest 100 % in the vice fund, but maybe just do some plain-vanilla textbook investing and volunteer your time or other resources for the causes you value.

Interesting topic to bring up.

My partner, who is very ethically minded, was finally ready to start committing to a long-term investing strategy in an index fund.

I was surprised when she realized late that an index fund meant she’d be putting money, theoretically, into oil companies and arms manufacturers as well as supermarkets and similar.

After spending so much time discussing the merits of cheap index tracking with her, it pains me to see her going off to investigate actively managed ‘ethical’ funds to avoid this, especially as the benchmark of ethical is so wooly.

Personally I think you have to take a realistic view. I don’t directly buy stocks in tobacco or arms companies, for instance, but I wouldn’t miss out on the benefits of passive index investing – there are other ways to make your point with your money, that are less potentially damaging to your wealth.