A Dangerous Game Of Us vs. Us Played With Our Life Savings

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Tom Konrad CFA

US law requires that money managers put their clients’ interests first.

Investment advisers and money managers almost universally assume this means that they must try to make as much money for clients as possible. If your job is all about money, this can seem like a natural interpretation. More money is better, right?

For others, equating making money to serving clients’ interests seems like a very narrow view of the world.

If Tracy is saving for retirement, she obviously wants to have enough money to pay for it. She also wants to be healthy enough to enjoy it. If her money manager invests in a company which poisons her drinking water to increase returns for its shareholders (including Tracy), she probably won’t be very happy about it, no matter what the gains in her 401(k). Her adviser’s pursuit of profit has clearly not served her very well.

This scenario may seem far-fetched: What’s the chance that Tracy is directly harmed by a company she owns?

In truth, that scenario is not at all improbable. It happens all the time. Most investors own slices of most large, publicly traded companies. 44% of US households owned mutual funds in 2012. Whenever a large public company harms more than one household through its actions, it’s probably harming a shareholder. Only our hands-off approach to our investments, often through multiple intermediaries like advisers and mutual funds, keeps us from thinking about the harm we’re doing to ourselves.

Some might justify this harm by saying that other shareholders’ gains outweigh the harm to one or two families. But what about climate change? When a company emits greenhouse gasses, it’s harming all its shareholders. And their children.

When it comes to companies polluting, it’s not us vs. them.

It’s a dangerous game of us vs. us. And it’s played with our life savings.

This article was first published on the author’s Forbes.com blog, Green Stocks on March 5th.


  1. I’ve never understood the connection between buying shares of a company and supporting its bottom line. I work in clean energy, and I like investing in clean energy because I think there’s a secular bull case, but I also own some dirty energy stocks (such as deepwater drillers) because I think they will offer good returns. A better articulation of my thinking is here:
    A company can raise money by issuing equity, so theoretically I’m helping them raise more money if I support their share price, but in reality most blue chip companies (such as the oil majors) are buying shares back instead. I would like to read a rational argument for the premise of ethical investing if one exists.

  2. Earth to Dan:
    As far as I’m concerned, you’ve made an argument for focusing on investing green stocks that are currently raising money for new projects.
    I’ll check your article.


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