Is There Really Such Thing as Socially Responsible Investing?

Rabbi Shaya Karlinsky July 18, 2016

Share This:

Many investors find the idea of socially responsible investing (SRI), appealing.

What makes a company socially responsible? How can you solve ethical dilemmas that can arise in business?

Rabbi Shaya Karlinsky, head of Darche Noam institutions, explains how Jewish thought can answer some of the most difficult moral questions in the investment world today.

Should you invest in a self-driving car company that pre-programs its cars to kill pedestrians? Is it appropriate to invest in a tobacco company?

Apart from moral issues, another question that investors often ask is what form their investment should take – stocks and bonds, or real estate? Find out what you need to know about investing in real estate and being a good landlord.

Follow Rabbi Karlinsky at: www.darchenoam.org and on Twitter @Shapells.



Watch What is Socially Responsible Investing? on YouTube.

Read the Transcript

Interview with Rabbi Shaya Karlinsky

Rabbi Shaya Karlinsky, co-founder and dean of Shapell’s and Midreshet Rachel veChaya, discusses ethics and investing. What do Jewish values teach about ethical investing, and what are the moral questions raised by self-driving cars?

Douglas Goldstein: I am very excited to have, on The Goldstein on Gelt Show, Rabbi Shaya Karlinsky from Jerusalem. He is the head of the David Shapell College of Jewish Studies and Midreshet Rachel College of Jewish Studies. At this college, men and women study Jewish texts, philosophy, and law.

He’s also known as an expert in business ethics, and people come from around the world to Jerusalem, to talk with him about issues in business and ethics. Rabbi, why would anyone, in this modern era, be looking towards ancient text to try and understand the technology today and make smart investment decisions?

How Do Jewish Values Help With Modern Investing?

Rabbi Shaya Karlinsky: When we talk about socially responsible investing, it becomes a very subjective thing. Without some objective standards, without some frames of reference that go beyond the feelings of a person, it’s really hard to correctly make your decisions if socially responsible investing is a value. Judaism does believe that it is a value, but we need to define what our ethical goals are and what we consider moral as opposed to legal.

Douglas Goldstein: I’ve been working on Wall Street for about 25 years now and socially responsible investing is increasingly being called ‘impact investing’. They say you should do well by doing good. But the problem is there are a lot of confusing issues. There’s a company called Monsanto, which made genetically modified seeds for agriculture. Some people are of the opinion that it’s a great idea since more people will be fed, while others say it’s irresponsible.

Then there are companies like Dow Chemical, who are today’s leaders in environmental issues but who, in the past, were responsible for the death of thousands of people because of pollution. How do we define objective standards? Why would Jewish ethics be relevant to an American investor who is looking to invest wisely?

How Relevant Are Jewish Ethics to an American Investor?

Rabbi Shaya Karlinsky: Jewish ethics can provide a more objective framework for what is considered ethical and moral. You can’t have an ethical or moral dilemma when you have a moral decision versus an immoral decision. Ethics and morality, when there’s a conflict, requires two compelling ethical values that are in conflict. If somebody leaves a wallet on the desk and walks out, I have to decide whether to keep the wallet or return it. There’s no ethical moral dilemma there. There’s a dilemma whether to be moral or to be immoral.

When we’re talking about genetically modified food seeds, we are dealing with two conflicts. On the one hand, many, many more people can be fed and that’s a compelling value. But there’s also something destructive about those genetically modified seeds. If it’s true, then we have a conflict and we’ll need to bring some kind of standards and some kind of weigh-in to the table and give the nod in one direction or another.

Douglas Goldstein: What you are saying is this is more than just some marker on Wall Street saying, “We either support GMOs or we don’t,” and trying to pitch it to people. It’s a much deeper question, but how do we get into that?

Rabbi Shaya Karlinsky: There’s a lot of hype and politics. There’s a lot of marketing on all of these matters, too. We need to, from a Jewish perspective, examine our sources. We have Talmudic sources, which is really the corpus of Jewish law and Jewish ethics. We spend time studying these to try to bring these values to the table and resolve these conflicts.

Douglas Goldstein: Are the values the same? The Talmud was literally written thousands of years ago. Does it really have anything to say about issues that affect us today?

Rabbi Shaya Karlinsky: Yes. I say that only through experience and having studied it with many businessmen. We go to these sources and over and over again, the businessmen are amazed at both the sophisticated understanding that the Talmud brings to business issues as well as its moral sensitivity.

Self-Driving Cars and the Issue of Ethics, Morality, and Investment

Douglas Goldstein: Rabbi, let’s talk about self-driving cars. The Google car or the Tesla car are good examples. Let’s say it’s driving on a bridge and a little girl crosses the street. Either the car is going to decide to jump off the bridge and save the pedestrian and therefore kill the driver or it’s going to go straight and kill the little girl. Let’s presume for our discussion, there is no other choice. It comes down to this. How can someone make an ethical decision about whether to buy such a car? Ultimately, we’re going to back it up, whether you should invest in a company that is making such a decision.

Rabbi Shaya Karlinsky: This is a question that is being asked much too far down the food chain. In other words, when we want to talk about what decision should be programmed for the car to make, we have to ask what decision a human driver would make. We have to work from there, otherwise you have no frame of reference and it becomes very arbitrary, very emotional.

In that situation, Jewish law and ethics bring to the table a very fundamental principle. When a person’s life is in danger, should he choose his life or the other person’s? The Jewish law is clear that one’s own life takes precedence. On the other hand, if one has to save one’s life by committing murder, then that is a crime that one must forgo one’s life for. There’s a difference between committing murder, which is a sin, a capital crime. You must give up your life rather than commit murder.

A driver who is confronted with that situation is allowed to make the decision to save their life at the expense of the pedestrian. That is exacerbated if the pedestrian is behaving illegally. If we accept that as the frame of reference now, the car can be programmed. It is legitimate to program the car to save the driver’s life. That is the basic approach.

There is one mitigating factor. That is that here the driver is not the one saving his life at the expense of somebody else’s life, but we have a programmer deciding whether the car should continue driving or veer off. Then we bring another Jewish principle to the table, and that is what we can call status quo or non-intervention. That’s when there’s a situation that if I intervene, there’s going to be one problem, and if I fail to intervene, status quo, an equally serious problem will be created. The nod is always given to non-intervention.

One could make the argument that if the car is driving in a certain path and the only way I can save the driver is by veering and by going straight, I will kill the driver, then I would continue straight rather than veering to kill the pedestrian.

However, if I kill the pedestrian by continuing to drive and I have to veer, that will kill the driver; it is legitimate to continue driving because that’s called non-intervention. These are the two approaches that one would take when deciding how to program the car.

Douglas Goldstein: In the case you’re describing, the pedestrian would be killed either way if I continue going straight. Are you saying the end result is the same no matter which principle you use?

Rabbi Shaya Karlinsky: It depends. One could give the nod to the driver and say that he is allowed to do whatever is necessary to save his life at the expense of the pedestrian. One would be allowed to program the car in such a way.

One could argue that the proper way to program the car would be non-intervention or non-deviation from the planned route rather than deviation, but I would give the nod to doing it the way the driver would do it. The driver has the car, and he’s the owner of the car, and he is driving the car and therefore, it would be legitimate for the programmer to do whatever the driver would do if he was driving the car.

Douglas Goldstein: When you’re driving, you have to make a split-section decision about whether to kill the little girl or to kill yourself. These cannot be compared to a committee sitting in Google, discussing this issue and bringing in socially responsible investment representatives. They are going to have a chance to think about it. Is there any difference between pre-programming this decision and making it right?

Rabbi Shaya Karlinsky: There’s no question that in real time, the driver may not make the right decision because he’s under pressure. But when we’re talking about values and morals, we’re talking about what is the correct thing to do when you are in complete control. When the driver is able to make a rational and moral decision, that’s the decision we should make when we’re programming the car. Obviously, in real time, the driver may make a mistake but we certainly don’t want a program based on what a driver under emotional pressure might do. We can program the car to follow a perfect ‘morality’.

Douglas Goldstein: Again, I stress that it’s not a computer deciding. It is the programmers who decide it. What if the Google programmers decide that if the car detects there’s a little girl and she is 10 years old, she has more life potential than the 50-year old driver, therefore, we’re going to kill the driver and that’s the way that they make a decision? Let’s bring it back to the question of investing.

It sounds to me like you would define that as an immoral choice because the moral choice, you said, is to protect the driver. Are we allowed to invest in a company that at the outset - with thought and deliberation - makes the choice that we would define as immoral?

Rabbi Shaya Karlinsky: When you say the word ‘allowed’, that is a legal statement. Judaism and Jewish law and ethics cannot prohibit you from investing in such a company. There are too many layers removed from your investment to the decision being made and the actuality because a case could be made. Judaism would not have given the nod to the 10-year old girl unless it would have been a non-intervention decision, but in general, the fact that she’s a 10-year old girl versus a 50-year old driver, that’s an emotional decision. That’s not a legal or ethical decision from a Jewish perspective.

But the permission to invest in such a company where the activities of a company are certainly legitimate shouldn’t bring in a legal or moral issue. A person may emotionally not want to invest in such a company and that’s fine. If, however, you’re turning to me to ask me whether there’s a problem investing in a company that made that decision, I would not say that there’s much of a connection between your investment and any immoral or illegal behavior.

Douglas Goldstein: It sounds to me like you’re differentiating between investing in Google that may make a decision to kill the driver as opposed to, let’s say, funding a tobacco company.

Rabbi Shaya Karlinsky: There we get into the real issue of ethics, morals, and connections. What level of responsibility do I have for the results of the company? A tobacco company is pretty extreme, and yet one could say that in theory, the tobacco company is manufacturing a product that if it was used responsibly, a couple of cigarettes a day, would not lead to the death and the horrendous health problems that regular smoking can lead to.

I personally think that a store that sells cigarettes is not behaving at the highest moral standards, but I don’t think we can say that there should be some legislative reason to avoid that. A person may not want to out of sensitivity. The Torah and the Bible tell us to be people of holiness and ethics. To do what is right, and that goes beyond doing what is legal.

The Jewish law does give a lot of flexibility in these moral, ethical decisions as opposed to providing a resource that is for somebody to sell a gun to a terrorist. That’s absolutely illegal in Judaism. But Judaism wouldn’t prevent a gun store owner from selling guns that have legitimate uses, even though someone may use it illegitimately. Same case applies to selling a car to someone who would later kill someone else with that car.

Douglas Goldstein: Rabbi, how can people follow you, follow your work, and maybe even have a chance to talk with you to learn more about business ethics?

Rabbi Shaya Karlinsky: The first place is to visit our website, http://darchenoam.org/ There’s a range of programs including an executive learning program where if people are visiting Jerusalem, they can come and study with us topics of interest to them. We look forward to welcoming inquiries.

Douglas Goldstein: Rabbi Shaya Karlinsky from Jerusalem, thanks so much for your time.

Rabbi Shaya Karlinsky: Good to talk to you.



Featured on:
Arutz Sheva
The Jewish Press
Available On:
iTunes
Stitcher
Sponsored By:
Profile Investment Services