Saturday, June 18, 2011

USCCB Socially Responsible Investment Guidelines - Part 7: Encouraging Corporate Responsibility



The sixth and last area covered by the investment policies of the USCCB is "Encouraging Corporate Responsibility".

This category is in fact a summary and also a catch-all.  What does it mean to be a good corporate citizen?  It really boils down to a company behaving in ways that are acceptable to the society in which it operates.  Largely, it is a question of morality.  Therefore, this category should not be new to us by now.  By looking at the previous 5 categories of protecting human life, promoting human dignity, reducing arms production, pursuing economic justice, and protecting the environment, we would know what a good corporate citizen looks like.

In my opinion, there are 3 main categories of corporate citizens: the bad, the questionable, and the good.  The bad is an easy one; the company is really all about making money.  If corners could be cut, you can be sure they'd be cut.  If they screw up something, they will try to cover it up.  A good example would be Johnson and Johnson (Ticker: JNJ), with its recent drug recall fiascoes.  The questionable may include Google (Ticker: GOOG).  Google's got some nice initiatives, which includes the promotion of renewable energy, but it also has some left leaning tendencies, such as support for gay marriages.  Lastly, the good are the bullet proof companies, where their business is beneficial to society, and it is not plagued by moral issues.  I have yet to find such a company.  Why not?  It's simply because I'm just a regular joe.  I don't even know half of what's going on in the company at which I work, how is it possible to verify that all of activities of any one company are ethical?

That is not to be a cause for concern, however.  As ethical investors, we are not required to find the perfect company.  As I said, that is simply not possible.  What we are to do is to do the best that we can, within reason, to conduct research on a company to see if they are good corporate citizens.  What does that entail?  An hour or two of Google searches will likely suffice.  If there are some glaring misconduct, chances are people will know about it and it will be on the Internet.  If there are minor issues, you may not be able to find out about it, but then again, they likely don't warrant boycotting of their stock.  In the end, what matters is really up to you.  No one is pointing a gun at your head to make you screen stocks for ethical misbehaviour.  God will likely not damn you to the Inferno for not spending more than a couple of hours researching either.  The fact that you're looking into the corporate citizenship of a company already puts you ahead of 99% of all other investors.  Give yourself a pat on the back!

Now that we've gone through the USCCB investment guidelines, I think we can safely say that we can do our due diligence when investing.  Our research may not be perfect, but it's miles ahead of not doing any at all!