Here, Cape Breton University Professor Todd Pettigrew argues that divesting from “unethical” companies isn’t as easy as activists make it sound. After reading his commentary, check out Torrance Coste’s argument in favour of divestment.
I served, for a brief time, on the Board of Governors of Cape Breton University, and one thing I did during that period was speak in favour of looking into ethical investments. After all, we know from the proverbs that money talks. So if we are talking with our money, why not have it say something important?
Ethical investing, I argued at the time, seemed all the more urgent in the context of university education. If we are trying to teach our students to think critically, shouldn’t we ask tough questions about scholarship endowments and pension funds? Should we give scholarship funds to a student studying, let’s say, social justice, and then tell that student not to worry where that money came from?
I wasn’t on the Finance committee that looked into the matter, but recently I began to get a sense of the difficult task they had been charged with. Credit must be given to the students who have called for a national ranking of ethical investments at universities. The project seems, however, unlikely to get very far.
Look carefully, and you see that the calls here are not so easy.
The devil, it turns out is not always in the boardroom, but rather, as they say, in the details.
What, after all, counts as an ethical investment?
According to reports, students calling for divestment list tobacco, fossil fuels, and weapons as three supposedly unethical areas of investment, and those do seem, at first glance, to be promising candidates. So let’s consider each one in turn.
Tobacco companies, one might argue, make a lot of money off of addicts who wish they could quit even as they are dying of lung cancer—so refusing to invest in such companies might seem like an easy call. But that’s not the whole story. Some smokers don’t want to quit: even Health Canada recognizes people have the right to smoke if they want to. I know some people who enjoy an occasional cigarette at a party, and nothing more.
I myself quite enjoy the occasional cigar after dinner with friends. I know the risks and weigh them against the benefits. And I don’t resent the House Horvath for making my favourite cigar. I applaud them. Students at the University of Toronto might have cheered when their school divested itself of tobacco, but did they reflect on the fate of their own Johnny Miller, maker of Canada’s only hand made stogies?
What about fossil fuels then? Well, consider the financial company Ethical Funds, whose Ethical Canadian Dividend Fund invests in Canadian Utilities, which is in turn owned by ATCO, a company that, among other things, “provides a wide range of services” to oil and gas companies in Western Canada, and is looking to take advantage of “massive natural gas” expansion in Australia. That’s exactly the kind of company students say is unethical.
But wait, ATCO also has green energy projects, so maybe they are ethical after all.
Not so fast: ATCO identifies hydro-electric generation in the Canadian north as one of its future priorities, but such projects have been the source of heated debate before, as in the case of James Bay, where a massive hydro project caused controversy over its effect on indigenous peoples and the environment.
Similar concerns have been raised about power generation in Northern Manitoba where power projects have been blamed for “community trauma.”
Okay, then, how about weapons? How can it be moral to build products whose express purpose is to kill other people? Well, what if those weapons are used in the cause of defending the innocent or the oppressed? Should we divest ourselves from gun manufacturer Colt? Does it matter that they make the C7 A2 automatic rifle used by the heroes of our Canadian Forces?
And to what extent should a company’s home country be an issue? Or its the country of its customers? Should we refuse to invest in any company that does business with Iran or China given their dubious records on human rights? What about American companies located in states with capital punishment? What about boycotting companies from Israel? If you are reading this in the UK, you might be in favour of divesting from Canadian companies over the Canadian seal hunt.
Pity the poor soul who is tasked with keeping track of the ethical implications of every wrinkle and nuance of the world’s politics and finances.
My point is not to argue that any particular company, or industry, or country is good or bad. My point is that there are almost no easy cases—every investment is bound to have its pluses and minuses, ethically speaking. So, while “no unethical investments” sounds great at a protest rally, the slogan rings hollow the moment it’s really tested.
When I served on the CBU Board, the Finance people came back and reported that finding ethical investments wasn’t feasible. I was skeptical at the time—but it turns out they were right.
Editor’s note: The original post inaccurately identified the petition as originating from McGill.