Why I would not invest in companies that have a questionable history

As I write this, thousands of workers who produce goods for companies such as Nike and Adidas are still on strike for a fifth day in Ho Chi Minh City over social insurance cover. According to the Guardian, these sorts of things are a relatively rare occurrence, but Nike, in particular, has a well documented history of poor working conditions and disregard for environmental degradation. Although Nike shares have been constantly rising for the past 5 years, people who invest in their stock are propagating the idea that what they do is somehow right.

Personally, I would not want to promote the idea that exploiting thousands of workers and paying them less than minimum wage in sweatshops is okay. Companies such as Nike, where the money they make is the most important thing will only listen when there is a lack of investment. Even though I acknowledge that one person not investing in them will not make a considerable difference, I would not want to be part of this growing general consensus that it is only the data that matters when investing.

In my opinion, one should also take into account the human values that the companies choose, and in a utopian world, the companies growing the most rapidly would be the ones with better conditions for workers, not higher dividend yields or anything of the sort. What makes a company great, in my opinion, is if they can maintain or even improve profits and sales without having a visible history of poor working conditions in LEDCs and NICs such as the aforementioned Vietnam.

People investing in these companies will not set a good precedent for that to happen in others. As the public, we need to incentivise these companies to clean up their record by giving them an ultimatum, that we will not invest unless these companies make sure that they do not exploit these poor workers, and, as such, their share price will decline. Am I thinking of a far too idealistic society? Maybe. But at least it’s what should happen.

By Shrey Srivastava

A finance and economics enthusiast, and someone who wants to share his views with the world.


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