My Social Screen

In the context of socially responsible investing, a social screen is a set of criteria that an investor evaluates companies against. If a company doesn't meet those criteria, they don't get investment.

I haven't found a fund that meets my ethical criteria, so I'll probably make my own investments. Thus, I need to figure out what my social screen is.

Below, I have a few criteria. The guiding principle behind these criteria is that I don't want to invest in a company that is bad. The criteria are ways of evaluating whether a company is bad. In general, if the company could continue to exist in a perfect world, they're probably okay, and if they couldn't, then they probably aren't. If the world becomes better, I shouldn't be financially worse off, and if a company does better financially, the world should become better.

Product: Do No Harm
There are some products that make the world a worse place. If a company makes one of those products, I won't invest in them.

This applies to products that increase human suffering when the product is more widespread or successful. For instance, cigarettes and McDonalds reduce human healthiness when more people use them.

This also applies to products that are not intrinsically bad but whose use is often bad. For instance, using firearms at a shooting range for fun is perfectly fine, but weapons are often used to hurt people (or non human animals). Similarly, there is nothing intrinsically wrong with porn, but it often demeans women, and there is nothing intrinsically wrong with alcohol, but it often leads to addiction, alcohol poisoning, and drunk driving. An increase in the use of one of these products is not necessarily bad, but an increase in support for the industry or a company in that industry probably would be bad.

This does not apply to products that empower people to do new things even though people might use those new things for nefarious purposes. The internet allows people to publish hate speech, but it also allows lots of good things. I don't think that the world would be a better place if we divested from industries that create new technology; I think that it's the responsibility of culture and government to promote more of the positive uses and reduce the negative uses.

Company: Culture of Respect
People make mistakes. Companies also make mistakes. That's okay as long as they learn from their mistakes, are willing to take accountability for those mistakes, and have sufficient management structures such that they try to hold themselves accountable internally to prevent bad stuff from happening in general.

A lot of the critiques that people have of Google are silly, in my opinion. For instance, people critique them because the Google Street View cars accidentally listened to people's wifi traffic (less than a second of traffic). When Google found out about this, they apologized, got rid of the data, and made sure it didn't happen again. When I interned there, it seemed like people really held themselves to a high standard and tried to make sure that they didn't make mistakes.

In general, the company should have a culture where they respect their users. They should make a product that they would feel good about using. They should feel like they are making the world a better place. In other words, they should care.

Even if a company makes a good product, if they don't care about it, then they might not be successful in the long term, and they might not make a good product in the long term.

The management should also respect its employees. If, for instance, a company prevents employees from unionizing, then they aren't being very respectful, and they are run in a way that makes the industry worse.

Supply Chain: Improving If Imperfect
The supply chain of a product is everything from natural resources until right before the company makes their final product. For instance, the supply chain of a computer might be something like:

  1. Extract Natural Resources
  2. Refine Resources
  3. Turn Resources Into Chips
  4. Assemble Chips Into Computer

My computer is assembled by union workers in Detroit, so the last step is humane. The chips are a mixed bag: I think that the majority are actually made in industrialized countries, but a sizable minority are probably made in sweatshops. Since I buy from Union Built PC, I expect that they seek out the chips that are humanely made.

The processes of extracting and refining resources are not transparent at all. Right now, 1% of the world's Coltan supports child soldiers in the DRC, so we could easily just use Coltan from Australia, but we don't know which 1% is the bad 1%.

HP's supply chain is as bad as any other computer maker, but they have taken a leadership role (along with some other companies) on introducing transparency into the resource extraction and refinement process. Their supply chain is bad, but they are actively working on making it better. However, I am unconvinced that they support humane production or assembly of chips or that they are making any progress in that, so I don't think that all parts of their supply chain are improving.

The company should not do anything that is intrinsically unsustainable. That is, if we lived in a sustainable society, it's okay if a company would have to adjust, but the company shouldn't go out of business.

I think that people would still use air travel in a world that used resources sustainably. Planes might need to be modified to use biofuels or hydrogen power or something, but I think that they would still exist. Car and computer manufacturers would need to adjust their practices (for instance, to use more recycled goods), but they would still be working in a sustainable world. Oil extraction companies probably wouldn't exist (or at least wouldn't be very profitable) in a sustainable world.

The company should also be proactive about sustainability in other ways. It's okay if a company isn't carbon neutral as long as they are working on reducing their negative environmental impact. For instance, despite all of Wal Mart's faults, they have been working on reducing the environment effects of their products and shipping.