The Hindu Business Line : <I>On ethical investment </I>

I was startled to find that the Google search engine had as many as 27.2 million entries under this one title. That is the measure of the distance corporate social responsibility (CSR), subsequently graduating into social dividend, has travelled in recent years. The difference between CSR and ethical investment lies in the universally posited ethical criteria dominating the latter. A company should not think that its duty is only to make profits anyhow for distribution to the shareholders or that it has discharged its CSR by allocating a part of its earnings to charities.

It must assume a proactive role in addressing the ills and evils of society from which it derives its support and sustenance. It should constantly evaluate and monitor the effects, favourable or adverse, of the items it produces or the service it provides on environment and natural assets, and compensate the damage caused, whatever it takes in terms of costs or efforts. Ethical investment has to do not just with conforming to laws, but being ahead of them in matters that concern societal well-being, such as the rights of tribals, avoidance of child labour, wildlife protection, conservation of non-renewable resources, social forestry, and provision of basic amenities to the poor.

Recently, the Financial Times and the London Stock Exchange hit upon an FTSE4 Good Index requiring companies to be listed, taking into account the nature and extent of their adherence to specified parameters of environmental, social and humanitarian behaviour. Kept out of this privileged group are tobacco producers, manufacturers of weapons, owners and operators of nuclear power stations, mining companies and firms processing uranium. The idea is catching on. In the UK, investment in ethical funds is said to have risen by 1750 per cent between 1989 and 2000, and in the US, by 82 per cent between 1997 and 1999. Overall, about 12.5 per cent of corporate funds constitute ethical investment abroad.

B. S. RAGHAVAN

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