Socially Responsible Investing?

I was going through this article:

I wondered if someone, who is really interested in ethics would try to avoid companies which sells products/services such as:

  1. Tobacco/Cigarettes
  2. Alcohol
  3. Products made from killing of animals.
  4. Gambling

I know many people would refute some of the points. But I am not here to preach anybody. I just wanted to know that if an investor wants to avoid products based on few or all checkpoints mentioned above, what kind of sectors/companies would he or she would have to filter out even if their future prospects look super good?

Some examples which come to my mind

  1. VST Industries (Cigarettes)
  2. Most Indian Pharma companies such as Granules India, Strides Arcolab, Torrent Pharma, Alembic Pharma which manufacture Gelatin based capsules. (Animal product)
  3. Textile companies such as Orbit Exports (Natural silk obtained from animals)
  4. Avanti feeds/Waterbase (Shrimps of course!)
  5. United spirits (Alcohol)

Again, I know people would bombard with their logic on what is ethical and what is not. I welcome all of them :slight_smile: But what interests me more is if people could contribute to the list, so a person who believes in some of the ethics doesn’t innocently becomes a cause to violate the ones he or she adheres to.

Also, a list of stocks/sectors which don’t infringe some or any of them would be awesome.


In my opinion, this discussion of ethical business is futile. The reason being, man is heavily dependent on animals for a living. Everyone’s definition varies on what is “ethics”. Ethics is rather, whatever suits oneself based on what is commonly agreed upon by a majority of people. Let me list products that use animal products, the companies could be many who make them. In the end, if you really really want to be away from all this kind of business, one should be a hermit.
Usage of animal products:

  1. Plastic bags - Many plastics, including shopping bags, contain ‘slip agents’, which reduce the friction in the material. What are those made of? Animal fats
  2. Car and Bike tires
  3. Glue in wood work and musical instruments
  4. Biofuels - nowadays animal products are used - beef or chicken biofuel
  5. Fireworks
  6. Fabric Softener
  7. Shampoo and Conditioner
  8. Toothpaste
  9. White and Brown Sugar
  10. Any kind of industry that produces leather goods…shoes, belts, wallets etc
  11. It is not just few pharma you have listed…but animals are used for trials.
  12. Perfume industry

And then there are industries/companies that are indirectly using products made from killing of animals…hotel industry selling meat products.

I will be really interested to know, which industry/company exists to be invested if you apply the ‘ethics’ filter. Like I said, if one wants to justify, then the definition of “ethics” can be tweaked to suit oneself.


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Good to know that some people think in these terms.

I am fine with buying Tobacco, Cigarettes, Gambling and Alcohol stocks.

I converted to vegetarianism when I was about 12 thinking of the agony that animals have to go through. Do not use leather products(leather shoes, belt, bags etc) either. I don’t buy sea food stocks like Avanti, waterbase etc or the leather products stocks like Mirza international or a Silk stock (orbit).

I buy pharma stocks (also take Gelatin based capsules whenever I have too) but I wish there was some substitute for Gelatin.

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Awesome Nagaraj for contributing to the list :smile:
Definitely, I agree one needs to be a hermit to be absolutely ethical.
Some sectors/companies which come to my mind which has high chances of passing through this filter could be:

  1. HFCs like Gruh and Repco.
  2. Software Industries.
  3. Tasty Bites Eatables.
  4. Rating agencies like Crisil.

There are substitutes for Gelatin in form of cellulose based capsules but they cost 6-10 times more compared to gelatin.

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This is very sensitive topic. If it comes to ethics, then one should not invest in any companies which harms the environment(air, water, soil, animal and trees). The exclude lists will be lot not a few what is mentioned.

Sectors mentioned may not be so ethical
pharma : some drugs are habit forming. proper due diligence not done before launches. bribing doctors for prescribing, etc
lending : unethical in many religions
credit rating : its like abhimanyu’s chakravyu. i have had a company rated from x , and when i wanted to move to y which was quoting much lower, the process is very very painful

so on and so forth.

@Nishanth, its very difficult to do so… for example you may want to keep yourself away from Tobacco/Cigarettes will that mean you will not Invest in LIC ? cause majority stake holder in ITC
is LIC… i’m strictly vegetarian that doesn’t mean or stops me to invest in poultry or Egg processing industry… it’s futile excerise…

Dear Nishant,

When I buy into any company, I am buying a small part of ownership.

I apply the following filter when I buy:

  • Dont buy any company whose products I wouldnt want to sell myself.
  • Dont buy any company whose products I may consider as harmful to humans / may not like.

I am applying an ‘inner scorecard’ when I invest, I dont care if I pass up a compelling opportunity to make loads of money bypassing the above filters.

Best regards.


Thanks for the comment Aniket. Which kind of companies pass through as great companies through your inner scorecard?

Thanks Nishant for starting a topic very close to my heart. Largely I agree with Aniket Gore that I think like a consumer and 100% business owner of the company before deciding.

Some companies I have avoided due to personal beliefs (not that I would have surely bought, but stopped evaluating further once I realized it does not confirm to my beliefs):

  1. Avanti Feeds (Non-Vegetarian).
  2. MCX (speculative, view also shared by Prof. Bakshi)
  3. Tasty Bite Eatables (Non-Vegan; they sell some paneer and other dairy based foods).

In the following I do not wish to hurt any one’s religious (or lack thereof) or other personal beliefs. I am just stating part of my perception of the world, parts of which could be incorrect.

As an example, most Hindus traditionally consider cows as sacred. So they don’t own businesses like leather (shoes, etc.). For this reason, most such businesses were traditionally owned by Muslims in India. However, most of the same Hindus don’t have any qualms about purchasing leather goods. Some of them don’t realize the consequences of their actions, some do subconsciously realize this; but without realizing that the supply arises because of the demand, they think, one more doesn’t make a difference. I don’t fall into this camp (or so I believe), and I think this is the essence of Aniket’s post.

Another example is that of banking. In Christianity, usury is considered a sin and in Islam it is considered Haram. It is for this reason that in the last 4, 5 centuries most of the money lenders (think sharks) in Europe were Jews. In fact most of the banks and central banks are highly influenced by Jews today also. Hindus historically never had to form opinions on usury since people of other religious backgrounds have ruled over the diaspora since many centuries. Of course, some Hindu kings (like kings everywhere) used to fool their subjects by making smaller coins, or mixing other metals in gold/silver coins. Christians now-a-days don’t seem to have many qualms. In Islam, there is a concept of Shariah investing. There was also an ETF formed for this reason. Most of the world does not blink while thinking about bankers, except sporadically after the 2008 crisis. I think if India has to progress while making exports/imports, we need to leverage for making faster progress. In leveraging, people who start earlier get major gains. I hope the economically backward countries (think Africa) are not left out - because the HFCs are surely going to make finance available to the Indian masses. I think of it like a pyramid/ponzi scheme, where the people at the bottom level pay the bill. ( On a slightly tangential note, coincidentally it is just today that RMB got a 10% weightage in the SDR of IMF. James Rickards of currency wars fame says this is the currency which will be devalued next time there is a financial crisis. After more than 5 centuries, the sun might again rise in the East. While we are talking of history, let me give some more information about one factor which led to the demise of India and China. Isaac Newton, the infamous investor of South Sea Bubble was the origin of the idea of the bimetallic standard - 1:15.5 ratio for gold:silver. This created lot of problems for India and China. When today I hear hypocrites from West talking about China, or India few years back, not respecting open markets while devaluing currency I am reminded of their lack of knowledge of the past and present.)

Another issue I think about at times is animal testing done by Pharma companies, though I have not yet formed an opinion on this.

There is also the issue of environmental concern, global warming etc. I have not yet avoided any companies because of this.

On the flip side, businessmen typically start businesses about which they are passionate. On similar lines, I own Ujaas Energy (though its not like I disregard financials before buying). I would also be happy to own Mayur Uniquoters, though failed to find MoS till now.

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Dear Nishant,

This will be a long post so please bear with me.

I saw your VP intro. and my situation is similar to yours. I manage the family portfolio: this means that I have to act with great responsibility to ensure that the capital is protected.

I actually apply the ‘inner scorecard’ and the indicated rules to decide what NOT TO BUY.

Typically, Many of us will have some standard AVOIDs like Not buying badly run companies, companies producing “me too products” with low pricing power, low promoter holding, low integrity management etc. etc.

To list Specific dislikes based on my individual values and experiences:

  • Tobacco - zero positive and poses active and passive danger to our lives.

When I earned the confidence of the family to start managing the portfolio in 2011 the first decision I executed was to liquidate ITC (about 30% of the portfolio) which was a several decades holding.

I looked back often at the decision and often agonised if it was right to liquidate a hallmark holding which had the potential to continue to offer growth for years ahead - purely due to my personal bias.

However, I was fortunate to bounce this situation off one of the eminent Indian sages of value investing and came away with the conclusion that I was right to exit the holding.
As long as I am able to beat inflation while ensuring that there is optimal margin of safety for my holdings, I have the full right to invest in companies that I believe check the right boxes.

  • Avanti Feeds - is also an avoid due to a personal bias. We suffered a bad business consequence during the avian flu crisis, many of our customers were poultry feed manufacturers. We all accepted mortality and annual flu outbreaks as “part of the game”, but everyone was grossly unprepared for the severity with which the last crisis struck. Several of our customers were bankrupt, we lost all our profits earned over a decade and closed operations. A major disease outbreak is a possibility for the shrimp industry and hence Avanti is a definite avoid for me.

As far as companies that pass the “avoid” criteria and ultimately make it to my “BUY” List- I have a varied basket:

A. Companies I can consider excellent and am happy to continue to hold as a core long term holding (assuming something does not radically change and secular earnings growth of 20% p.a. are achieved / a better long term secular growth story does not appear), they are:

Page Industries, Eicher Motors, Gruh Finance, HDFC Bank.

Pharmaceutical Companies such as Shilpa Medicare, Torrent Pharma, Alembic Pharma, Granules Ltd. all hold promise and if they continue to deliver year on year I am happy to continue to hold them. (I take this opportunity to acknowledge the assistance of @hitesh2710 for his kind and patient assistance to a number forum members queries on the pharma sector)

I believe quality Midcaps like Navin Fluorine resembles PI industries 5 to 6 years ago. There is a recent HDFC Securities report which you can refer to - elaborating the tailwinds. Good management and execution capability now it remains to be seen if they can deliver in the coming years.

Niche KPO company EClerx has been a holding for sometime, and will continue to be as long as earnings growth is decent. Tata Elxsi also is a holding and seems to have earnings momentum.

There are other speciality chemical companies, which are also discussed on this forum which are pretty interesting.

I have bought companies like RBL Bank and Pru ICICI insurance early and offmarket, and believe that such companies have the potential to offer secular growth in the medium to long term.

I also buy turnaround stories (E.G. Dharamsi Morarji) though I may switch out of turnarounds faster - if they achieve what I consider as fair valuation - or if a better turnaround presents itself.

In an ideal world (time permitting) I would have liked to do more active scuttlebutt, meet emerging companies and try and buy them really young, but I have professional commitments and enjoy my work - so I am happy to apply whatever time at hand - and be a hobby investor.

My ability to grow as an investor is entirely owed to the ability of great individuals to put on paper / internet / forums like ValuePikr their learnings, experiences and thoughts - which help me evolve. My gratitude to all.

The word “inner scorecard” is inspired by writings on this philosophy. Here is text of a mail Prof. Bakshi sent to his students on Inner Scorecard v/s Outer Scorecard:

Wish you all the best and much success with your investment journey.

Very Best regards,


Disc: Stocks discussed hereabove (other than the avoids) are held by me in my Portfolio. These are NOT buy recommendations. Please do your own homework.


was in a similar discussion on another forum after the announcement of liquor ban in Bihar

personally, despite being a teetotaler & non smoker, i couldn’t let go of the investment opportunity that ITC presented (when it was ₹10 paid up) (do not hold any, sold long ago)
there’s plenty of things one could consider for ethical investing and what one considers as ethical
you could look at the BSE Shariah for Shariah compliant investments
read up on usury banking, it is intersting

Hi Nishant,

Really nice to see this topic being brought up.
I always wondered if someone else apart from me also practice these ethics.
I avoid all the stocks in the categories you mentioned. I don’t mind not making money with these stocks. I never buy cigarettes, alcohol, animal products, gambling, pharma related stocks. All the examples stocks were coming to headlines for buying opportunity but I didn’t mind giving them a miss.
I am pure vegetarian and also avoid stocks with high scale of violence against nature.

There are still many stocks and sectors where we can participate, for e.g. to list a few:

  1. Education related stocks (e.g. MT educare, etc)
  2. Technology, SW & IT
  3. Auto
  4. Finance
  5. Solar energy
  6. Manufacturing related stocks not involving high violence
  7. Real estate & construction

So, there is still plenty of opportunity for us to make money from stocks not involving in high violence business.

All of us must think about this aspect of investing…

Thanks & Regards,
Amit Jain