Question

Would you think twice about investing in a sin fund if historical returns showed greater growth potential than SRI funds? What is the justification for your decision?

Answer 1

Answer:

I will think twice about investing in a sin fund even if historical returns showed greater growth potential than SRI funds.

SRI funds invest in socially responsible investments; these businesses are socially responsible because of the manner in which the business is conducted. In contrast, a sin fund is one in which the fund invests in the alcohol business, tobacco companies, gambling/casino companies, and some defense industries. In contrast to socially responsible investments, sin funds are called socially irresponsible.

From the virtue ethics point-of-view, choosing to invest in SRI funds even though the return in sin funds is higher is considered to be an act of good character. This decision is ethical.

From the long-term financial perspective, SRI funds investment in socially responsible companies has several benefits. Socially responsible companies perform well in the long-run because they have an improved brand image, superior competitive advantage, and potential to increase productivity. Socially responsible companies attract the best talent in the industry, attract socially responsible customers, and take actions to protect the environment. Moreover, such companies, comply with laws and regulations, reduce waste, and conserve energy. The implications are that in the long run socially responsible companies will remain financially viable, increase revenue growth, and increase their profitability. I will avoid investing in a sin fund even if showed higher historical profits and instead will invest in an SRI fund.