In our last blog we indicated that we may need to revisit the criteria that are often utilized for social responsible investing. As an alternative, we suggest a baseline decision criterion for investment and purchasing decisions that must first meet the threshold of human flourishing. Of the myriad of choices before us, are the investments or purchases we are considering directed towards companies that are providing needed goods and services that enable communities to flourish? Stated another way, are the products and service that the company is offering of such character and quality that they are contributing in positive ways to the lives and livelihoods of others?
Well-designed software and furniture, for example, can contribute to human flourishing, as can trustworthy accounting and legal services. Products or services that are predatory in nature, such as payday loans, may not meet the flourishing threshold. Are communities really better off as a result of this product or service offering?
One way to evaluate human flourishing is to study company credos, vision and mission statements. Vanguard businesses understand the principle of human flourishing and will put action into words. Enron listed “integrity” as one of its four values, but failed to create a culture that supported this ideal. Great companies aspire to be excellent, and then they develop concrete plans to get there. More often than not, returns follow. Consider the Johnson & Johnson Credo: “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.” This statement has guided the Company through good and bad times and helped maintain focus on holistic healthcare and long-term value creation. Or Google’s mission statement: “To organize the world's information and make it universally accessible and useful.” Open information is an equalizer and an act of justice and service to others.
By pursuing deliberate investment and purchasing strategies that ask the question of human flourishing, we can push against some of the abuses that have spun out of Friedman’s understanding of the purpose of business. Companies have moral obligations that extend beyond shareholders. Friedman’s focus on maximization of shareholder wealth can work in the opposite direction, driving organizations to the boundary of law and ethics and placing a premium on the short-term rather than building for the future.
After meeting our first threshold of human flourishing, a second decision criterion might be engaged. How do we allocate our investment and consumption decisions given our unique priorities? For example, if we care deeply about access to food in the world, we might prioritize a larger percentage of our investments in food distribution or agricultural companies. As another example, do we have unique concerns for our local community over national or global markets? If so, we might choose to reserve a portion of our investments or purchases for locally owned businesses. If not, we might allocate a higher percentage to the developing world where we can have an impact on job creation and economic growth.
Our investment choices and philosophies will shape the future and shape us an individual participants. Evaluating choices according to a human flourishing measure can offer valuable guidance. Allocation based on our unique priorities is an important, secondary consideration. Perhaps in the future, more complete “social investing” tools will emerge that will integrate many of the things we have discussed. For now, it is left to the individual investor, drawing on tools that support aspects of the social investment agenda, to bring the pieces of the human flourishing side together with the financial performance side of the potential investment.
Investing for human flourishing is not a perfect science. But we should all be a bit more conscious of the subtleties and importance of aligning our values with our investment and consumption decisions.
Albert M. Erisman, Ph.D., is Executive in Residence in the School of Business and Economics at Seattle Pacific University. He is a Fellow in the Center for Integrity in Business and is co-founder and executive editor of Ethix magazine. Prior to joining the SPU faculty, Dr. Erisman spend 32 years with the Boeing Company, the last 10 as Director of R&D for computing and mathematics.
John R. Terrill is the Director for the Center for Integrity in Business at Seattle Pacific University. Prior to joining Seattle Pacific, John served as National Director for Professional Schools Ministries with InterVarsity Christian Fellowship, as well as a human resources and organization development consultant with the Hay Group.
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