The RSMR Broadcast: Ethics and lifestyle choice - the reconciliatory balance

11 Mar 2022

The RSMR Broadcast: Ethics and lifestyle choice - the reconciliatory balance

It’s not easy reconciling personal ethics with the lifestyle and purchasing choices that we make in our daily lives. The burning question is: how do we balance personal ethics against the natural desire to look after our own financial wellbeing? And is it possible to find a fulfilling middle ground?

What affects the choices we make? Negative media coverage can have serious ramifications when it comes to consumer purchasing and consequently share valuation. Spotify has spent billions on building up its podcast business and currently has over 3 million titles on its platform. The Joe Rogan show is the most listened-to podcast on Spotify and with exclusive license to distribute the show, it’s a central part of Spotify’s expansion plans in a market dominated by big names such as Amazon and Apple. On a recent podcast, guests shared unchallenged anti-vax views, which caused artists and subscribers to pull their support from Spotify as a form of protest. This had a direct effect on Spotify’s share price (and consequently anyone invested in Spotify shares) wiping more than $2 billion off its market value. This is a clear demonstration of how consumers can choose to vote with their feet should they not agree with how a company, or platform in this case, conducts itself and distributes information.

Spotify had little choice but to review the episodes – the platform chose not to remove them, but Joe Rogan did issue an apology to Spotify on Instagram and pledged to provide more balance on his show in future. Did you think about switching from Spotify to an alternative provider because of your own principles? If so, were you willing to compromise in other areas such as sound quality, cost or availability? You may have felt like making a stand but did your principles override the potential cons and are alternative platforms like Amazon or Apple really a more ethical choice anyway? Do you have all the facts and how do you quantify your choice? It’s a tough call…  

What about when it comes to the car revolution? Have you switched to a hybrid to do your bit for climate change with the added bonus of saving money on fuel costs? Going fully electric is clearly the ideal goal but right now you might be thinking that they’re too expensive and, if you get palpitations when your mobile battery goes into the red, you may decide to hold off on your purchase until car batteries and infrastructure offer more reliability and reassurance. Some consumers may have nagging doubts about just how ethical the electric car revolution is – are the harsh and dangerous conditions that miners (children in some cases) have to endure in certain areas an acceptable price to pay for a reduction in carbon emissions?

The devastating invasion on Ukraine by Russian troops has led to Waitrose and Sainsburys announcing that they are removing all products that are 100% sourced from Russia from sale while Tesco won’t be buying products from businesses that are wholly Russian owned. The war is estimated to have killed hundreds of civilians and displaced more than a million people since it began. The choice to shop at and invest in supermarkets that have made the decision to remove Russian products from their shelves to stand united with Ukraine is likely to be a welcome and more obvious one.

Is there an assumption that new industries behave better than old industries? Oil and gas, big industrials and tobacco companies may be seen as the ‘bad guys’, contributing to the destruction of the planet while tech start up’s, unicorn companies and other newer businesses are potentially dubbed as the ‘good guys’, tackling the world’s problems, looking after their employees, and caring about the community that they operate within.

Some may say it’s not that simple and that all businesses, old or new, will always have competing priorities. Plenty of relatively new businesses are set up to tick all three ESG boxes and having no historical baggage and a blank canvas surely makes it an easier and more obvious process. It’s also worth bearing in mind that some businesses may be ‘gaming the system’ which can contribute to the confusion and inconsistency between the different tools that are used to provide ESG scoring.

This isn’t to say that businesses should be singled out – many of us make compromises every day. If we stopped to think, we might realise that we buy things or make decisions that go against our principles. The existence and convenience of businesses like Amazon may be having a devastating effect on the British high street and small independent businesses but during lockdown, most people would probably admit to being on first name terms with their Amazon delivery drivers. The decisions we make in life are based on many things, not all of which would fall under the ethical tab.   

The world is a complicated place and we, as investors, are filled with contradictions that can affect our own decisions on what we buy and who we support - that’s why we need a guiding hand when making investment choices. The concept of all businesses having sustainable and ethical practices isn’t yet a reality and until this ideal comes, investors need a way of understanding and quantifying their choices. Expertise, resources, and experience are essential to deep dive into the true ethical status of a potential investment and at RSMR, we recognise managers (and their teams) who provide this level of analysis and detail with a Responsible rating.


QUIZ QUESTION: Who has the biggest music library - Apple or Spotify?
LAST WEEK'S ANSWER: Fast forward 120 years and 'Happy Birthday' is by far the richest and most profitable song of all time. 


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