There are thousands of public companies in the U.S. and thousands more internationally. With all these options available to investors, why invest in companies and industries that you don’t believe in?
There have long been so-called Sin Stocks – those companies that some people have a moral, religious, or societal aversion to. Generally, these companies are viewed as exploiting their customers or causing harm to society. Some industries that come to mind are tobacco, alcohol, gambling, weapons manufacturers, prisons, and sex-related industries.
Each of us has to determine what we consider “sin stocks” and it is a personal choice. Some might be fine investing in casinos but wouldn’t invest in weapons manufacturers. Would a company like Coca-Cola or PepsiCo be considered by some to be a sin stock since they sell generally unhealthy food and drinks? It is up to each of us to decide.
Another aspect of investing is something called Socially-Responsible Investing – focusing on companies that are aware of and actively try to have a positive environmental, societal, or corporate governance framework and policies. Some of these companies may be related to clean energy, social change, Certified B companies, advancing clean water, or those that consider all stakeholders, not just shareholders, when making business decisions.
Personally, I am open to investing in most industries, but there are a few that are on my “do not buy” list. These include tobacco-related companies, private prisons, gas and oil companies, and gun manufacturers. I may miss out on profitable companies that provide significant dividends to their owners, but I am ok with missing out on these in order to avoid industries I don’t believe in.
Tobacco: The products these companies sell is an addictive and health destroying. Millions of people get sick and die every year from their products. I have had multiple family members die over the years due to smoking related diseases, including my father, who was a smoker from the age of 15 to a few years before he died at 52 years old. I do not want to have anything to do with this industry and do not want to personally profit from them as I do not see any positives to the users or society from their products. Some popular stocks here are Altria (MO), Philip Morris (PM), British American Tobacco (BTI), Universal Corp (UVV).
Private Prisons: Profit off the incarceration and labor of humans? No thanks. While I believe that prisons are needed as there are many individuals who should not be in the public due to previous crimes, I do not want to be involved or profit off of private companies making profits off this. Many prisons use the incarcerated population as cheap labor sources and many provide minimal physical and mental health resources. Some popular stocks here are CoreCivic (CXW) Serco (SCGPY), and The GEO Group (GEO).
Gas and Oil: I know I am going to get a lot of pushback on this one. Some will say that society wouldn’t function without them, the alternatives aren’t ready for wide adoption, the products are used for everyday items, etc. I get that, but if we continue to invest in and profit from these companies, will we ever move on to the new options? If we instead invest in companies working on solar, wind, renewable batteries, and so on, more innovations and breakthroughs can happen quicker. Vote with your dollars, be the change you want to see. There is widespread agreement that fossil fuels, and the burning of fossil fuels, is dramatically affecting the environment and human health. The faster we move on from this energy source, the more we can limit and hopefully reverse the damage that we have caused over the past 150 years. Some popular stocks here are Exxon Mobil (XOM), BP p.l.c. (BP), Enterprise Products Partners (EPD), Chevron (CVX), and Enbridge (ENB).
Gun Manufacturers: Most individuals do not need a firearm. We are not in the wild west and need to protect ourselves. In fact, in most homes that have firearms, it is people related to the gun owner who end up getting hurt or killed. According to Gun Violence Archive, in the U.S. we have had over 23,000 deaths so far in 2022 from gun violence. There have also been over 330 mass shootings in the U.S. this year. The number of deaths would be reduced significantly if guns were not allowed for most of the population. I will not invest in gun manufacturers as I do not want to support or profit from a business that the users and products kill people. That is the reason for a gun. To shoot it. Some popular stocks are Smith and Wesson (SWBI) and Sturm Ruger (RGR).
These are my no-go list. Not everyone will agree with me, but that is the point. We all have to make the decisions on what to invest in, and what not to invest in, based on our personal viewpoints and beliefs. With so many companies to invest our money with, why choose something that you don’t believe in?
I think this is important, because it’s your money and you should decide where and what it supports.
If you don’t believe in tobacco use, why would you literally partner up with and own a tobacco company?
I am curious though, if you own any mutual funds or ETFs with these companies represented in the holdings? Do you factor that in when buying one?