Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Dueling Fools: Socially Responsible Investing Bear Rebuttal

In my opening salvo in this SRI duel, I primarily focused on how the world's increasingly interwoven economy makes "socially responsible investing," for all intents and purposes, a purely arbitrary exercise. My distinguished opponent, fellow Fool editor Dan Caplinger, was not nearly as aggressive in his piece, instead choosing to highlight some of the best ways for investors to get involved in SRI.

Dan's piece will no doubt be embraced by many dueling voters. As you might imagine, however, I was not exactly moved to tell my grandmother we need to sell off her shares in Altria (NYSE: MO  ) and ExxonMobil (NYSE: XOM  ) and replace them with an all sunshine-and-rainbows portfolio.

Responsibly irresponsible
Not only do I think you should pass on SRI, but I'll also tell you that you can actually enhance your returns by seeking out "socially irresponsible" companies for your portfolio. The act of ignoring cash cows like Altria, Exxon, and Anheuser-Busch (NYSE: BUD  ) is itself deeply irresponsible.

Do you have a vendetta against your nest egg? SRI proponents must against theirs. How else could they deliberately steer clear of sinners like these?


Return on Equity

Net Margin

Free Cash Flow / Revenue





Diageo (NYSE: DEO  )








Simply put, by limiting the universe of stocks in which you can invest and excluding stud holdings like these, you're hindering your ability to choose long-run winners. If you love your portfolio, consider sin.

Cutting through the bull argument
In his opener, Dan made a point of highlighting a particular SRI fund, TIAA-CREF Social Choice Fund, as one that provides a low-cost entrance into the world of SRI. Dan pointed out a couple of companies in the fund's top holdings that stand out as pillars of social goodness, Johnson & Johnson and Procter & Gamble. Fine companies and investments both, to be sure, but what Dan did not discuss are the companies that are excluded from the fund.

Would you believe that last year, this very fund decided that Coca-Cola (NYSE: KO  ) was too irresponsible for inclusion? Coke doesn't sell booze, operate casinos, manufacture handguns, or develop next-generation superweapons. It sells non-alcoholic beverages. The horror! Can you imagine if some kid got a hold of one of those?

Apparently, just enough folks complained to the folks at TIAA-CREF that Coke should be excluded from the fund on the "basis" that many Coke products are pretty darn unhealthy. Seems too many kids have been drinking too much Coca-Cola. At the end of the day, though, who is responsible for the dietary habits of Coke-drinking children: Coca-Cola or the parents and children themselves?

How is it that Coke has been voted off the island, but Procter & Gamble, the maker of Pringles and Duracell batteries, is allowed to stay on as a key holding? Are there no kids who eat too many Pringles? Can you even begin to fathom the number of Duracell batteries thrown into landfills each year? Where on Earth do you draw the line?

The point is ...

You don't draw a line.
Socially responsible investing is not only done arbitrarily and wholly subjectively, but it can substantially reduce the number of investment opportunities from which to choose. At its core, SRI is not only impractical, but given the interwoven economy in which we live, it doesn't even exist.

Anheuser-Busch and Coca-Cola are bothInside Value recommendations, while Diageo and Johnson & Johnson areIncome Investor picks. Take a free trial to either newsletter to learn more.

Foolish editor Joe Magyer sins with the best of them. He does not own shares in any companies mentioned in this article. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 526146, ~/Articles/ArticleHandler.aspx, 10/25/2016 3:55:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,170.84 -52.19 -0.29%
S&P 500 2,143.18 -8.15 -0.38%
NASD 5,280.81 -29.02 -0.55%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 3:40 PM
BUD $123.75 Down -1.33 -1.06%
Anheuser-Busch InB… CAPS Rating: *****
DEO $108.34 Up +0.13 +0.12%
Diageo CAPS Rating: *****
KO $42.59 Up +0.03 +0.07%
Coca-Cola CAPS Rating: ****
MO $64.78 Down -0.17 -0.26%
Altria Group CAPS Rating: ****
XOM $86.65 Down -0.26 -0.30%
ExxonMobil CAPS Rating: ****