Is it hard to be ethical on Wall Street? It is a long-standing discussion I’ve had with many audience members at my financial and business ethics keynote speeches. As a business ethics keynote speaker and ethics consultant and author, I know the words “corporate social responsibility” often cause smirks and laughter to publicly-traded companies. To begin this business ethics discussion, I think you would enjoy reading an article that hearkens to the yester-year of 2013 in a Guardian article entitled Here’s why Wall Street has a hard time being ethical. I would point out a key paragraph:
“A precedent needs to be set, to slow down Wall Street’s wild behavior. A reminder that rules are there to be followed, not exploited. The managers knew what was going on. Ask anyone who works at a bank and they will tell you that.”
The author of the piece, an insider who started on Wall Street in the late 1990s, was commenting on the crash of 2008 where the banks and Wall Street had played it lose for far too long.
Is it hard to be ethical on Wall Street?
The author of the piece above, recalled an old-time, fallback line that as an ethics consultant and ethics motivational speaker have heard hundreds of times over recent years in regard to illegal and/or unethical practices on Wall Street: “Well everyone was doing it.”
That one, simple phrase has been played out in regard to the entire array of investing and business deals. It is the little girl or boy who, facing punishment, points to the child next to them and says, “They did it too!”
About five years after the article about (September 1, 2018), the Wall Street Journal ran an article entitled “Why It’s So Hard to Be an ‘Ethical’ Investor.”
The article showed that unethical Wall Street firms were up to their old tricks, marketing so-called socially responsible mutual to Millennials. The fund managers simply plucked-out stocks with connections to booze and guns and packaged them as “socially responsible.” Many of those companies were far from ethical, but the Wall Street firms were pushing the stocks. This caused a major backlash among Millennials and other, ethically-inclined investors.
“The ethical-investment industry started as a do-gooder niche that excludes so called “sin” stocks, like tobacco and weapons companies. But it is now mostly dominated by another idea: Companies that avoid crooked management, promote diversity or insulate themselves from environmental fines will outperform companies that don’t.”
In other words, it makes sense to be ethical on Wall Street.
Due diligence is ethical
Is it hard to be ethical on Wall Street? No, it isn’t. What is difficult is taking the time to choose financial instrments and companies selling those products in an ethical and transparent manner. It is a matter of due-diligence.
The situation begs investors to hold publicly-traded companies accountable and to reject publicly-traded companies who have a record of litigation for illegal dealings, unethical mamagement, a poor record on inclusion and other socially irresponsible behaviors, pollution and similar issues. If investors pressure companies it will not be hard to be ethical on Wall Street.
The pressures to be unethical, to exploit investors, come from an internal place. This makes it mandatory to not only conduct ethical trainining and to put up ethical screens, but for investors to hold publicly-traded companies accountable.
We live in a 24/7 news media, social media driven, world. Investors have the resources at their fingertips to determine more about funds, corporations, financial instruments and brokerages and banks than ever before.
If the pressure to be ethical is applied on investments, they will have no choice but to be ethical. It can be difficult for Wall Street to be ethical – or not, dependent on how Wall Street will be driven.
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