Business Ethics in Healthcare: Beyond Compliance

Sixteen: Socially Responsible Investing

In the ¤nal chapter of this section on the role of the healthcare organization as citizen, it may be useful to give some attention to the responsibility of the organization as investor. There are various other activities, such as purchasing , that also raise important questions related to the responsibilities of the organization. Responsible investing is, however, of special interest to a number of organizations today. The ethical responsibility of investors began to receive intense attention during the debate on the role of transnational corporations in South Africa during the apartheid era. Especially in the 1980s, there was widespread debate in the United States about the appropriateness of companies’ doing business as usual in a country with such a repressive and undemocratic government . A question for many concerned Americans was whether the very presence of corporations in South Africa tended, regardless of intent, to give support to and strengthen an illegitimate regime. A further question for those who institutionally or individually owned stock in companies doing business in South Africa was whether they themselves, through their investments, were also supporting and strengthening apartheid. Socially responsible investing involves, in general, a commitment to assessing the impact of the business activity of companies in which one invests. It is an effort to invest in a manner that re®ects and/or communicates one’s beliefs regarding ethical business practices. It involves making decisions about investments not simply on the basis of projected ¤nancial risks and returns, but also on the basis of ethical judgments about business practices. As an organization invests endowment funds, pension funds, or other monies , it has the same responsibility that it does in all of its other activities—to Sixteen Socially Responsible Investing promote the public good through careful assessment of the impact on the public of institutional or organizational policies and practices. The term “socially responsible investing” (sometimes called “ethical investing ”) is not meant to imply that all investing that does not make use of the strategies described below is “socially irresponsible” or “unethical.” The difference is, rather, that those who are involved in socially responsible investing are consciously focused, in all or some of their investment-related activities , on considerations related to ethics and to social and environmental impact . Socially responsible investing (SRI) means that there are both ¤nancial and social objectives in investing and that both are made an explicit part of investment decision-making. Those involved in SRI use different strategies or combinations of strategies . Three approaches discussed here are the use of social screens, shareholder activism, and alternative investments. Social Screens A common method of socially responsible investing is to use what is sometimes called an “avoidance strategy.”1 Investors avoid investing in companies that do not meet their criteria for social and environmental responsibility. “The negative characteristics can relate to the kinds of products or services that a ¤rm produces, the way it conducts its business, or the location of its activities.”2 The negative screening strategy is designed to bring about a close connection between investors’ understanding of what it means to be a socially responsible business and what they support through their investments. Investors can identify their screening criteria and do their own research on whether companies satisfy these criteria, or they can seek out funds and research organizations that do this on a routine basis. Social criteria can include , for example: 1. The company’s employee relations record Worker safety, history of union relations, workforce reduction issues, etc. 2. The company’s record on workforce diversity Discrimination claims, representation of women and minorities in senior management and on the board, etc. 3. The company’s environmental record The relationship of the company’s products to degradation of the environment , the disposal of (hazardous) waste, etc. 4. What the company derives it revenue from Addictive products or practices (tobacco, alcohol, gambling), weapons production or sales, etc. 5. The company’s record in other countries Wages and working conditions of employees, human rights in countries in which facilities are located, etc.3 Socially Responsible Investing 151 This is not a complete list, but it provides an indication of the range of considerations often found in social screening. Sometimes a particular concern about a company is taken as a reason, in and of itself, to exclude that company from investment (for example, no investment in any company doing business in Burma while the present regime is in power; no investment in...