Smart Buying

Should Ethics Determine Who You Do Business With?

Consumers seeking to do business only with ethical companies should ask these questions.

Question: I have a friend who refuses to patronize prominent businesses after they are discovered to have acted unethically. What do you think about this?

JAMES GLASSMAN: Why Socially Responsible Investing Is Not for Me

Answer: I’m fine with it—as long as your friend recognizes that making these decisions in a consistent, comprehensive way could end up being a full-time job. (The same goes for ethical investing, but so-called socially conscious mutual funds try to make this easier.)

I can understand consumers wanting to punish Wells Fargo and Volkswagen for the deceit practiced by some of their employees and executives, or shunning aggressive Silicon Valley firms (such as Uber) for their harsh corporate cultures. But here are some questions that consumers need to ask themselves:

- Are your choices simply reactions to negative revelations? Or are you also going to find out more about the regular business practices of all the major companies you patronize—their employee relations, environmental records, compensation levels, social stances, offshoring of U.S. jobs or whatever you care about most?

- If you avoid buying the products of a closely held company because you don’t agree with the politics of the company’s owner, are you taking the trouble to learn more about the politics and social attitudes of other business owners whose firms you patronize?

- Are you willing to pass up products that are deemed to be the best in their class—of high quality and well priced—because of something you don’t like about the maker?

- If you’re a passionate bargain hunter, are you aware that the makers and sellers of cheap products and services might be firms that squeeze their employees and vendors?

- In addition to boycotting companies you don’t like, are you tilting your patronage toward firms that have hard-earned reputations for business ethics (say, Costco, Lyft and Whole Foods)?

- Are you taking the time and trouble to tell the now-shunned company why you are no longer a patron?

SLIDE SHOW: The 10 Least Shareholder-Friendly Stocks

- Is your blacklisting forever, or can a company’s response to its crisis—restitution, firing the CEO—get it back in your good graces?

A lot of thorny issues to consider here.

Have a money-and-ethics question you'd like answered in this column? Write to editor in chief Knight Kiplinger at ethics@kiplinger.com.

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