STADIO School of Commerce Ethics Week

Who Pays for Your Returns? Ethics in Investment Decisions written Simonne Stellenboom | Module Coordinator, School of Commerce | Co-founder and Faculty Lead, STADIO Investment Society (SISOC) | Ethics Week 2026

Imagine you are considering investing in two companies.

Company A has delivered impressive returns over the past five years. Its share price has grown consistently, and analysts expect further growth. However, recent reports raise concerns about how it treats its employees and the environmental impact of its operations.

Company B has delivered more modest returns but has shown a commitment to fair labour practices, responsible business conduct and environmental sustainability.

Which company would you invest in?

Your first answer might feel obvious. Perhaps you would choose Company B because it aligns with your values. Or perhaps you would choose Company A because your goal is to grow your money.

But look more closely. What if Company A is actively addressing its shortcomings? What if Company B’s responsible image is better supported by its marketing than by evidence? What if you are investing on behalf of someone else whose financial needs differ from your own? And what if the extra return from Company A is what would help you support your family, pay for a sibling’s studies or build security you have never had?

Suddenly, the decision is more complicated. This is where ethics enters investment decision-making.

The return is only half the story

Every investment decision begins with a simple question: What return can I expect? A second question is asked far less often: Who pays for that return?

Every return is generated somewhere, by someone, through some process. A profitable business may create jobs, develop useful products and contribute to economic growth. Its profits may also depend on costs carried by others:

• Employees, when a company looks efficient on paper because it underpays staff or cuts corners on safety.
• Customers, when margins grow through hidden fees, misleading marketing or lending to people who cannot afford it.
• Communities and the environment, when pollution, water use or land damage never appear in the income statement but show up later in someone’s community.
• Other investors, when a company manipulates its financial results, and the people who trusted those numbers lose their savings.
• Future generations, when strong returns today leave the bill for later.

An investment can be financially attractive without being ethically uncomplicated. The question is not only whether it generates returns, but how those returns are generated and what comes with them.

Ethics requires judgement, not labels

Ethical investing is often linked to ESG (environmental, social and governance) ratings. These can be useful, but they do not settle the question. A company with a strong rating may still face fair criticism of particular practices. A company in a controversial industry may be making real efforts to improve.

Information is often incomplete, sources contradict one another, and companies naturally present themselves in the best possible light. Ethical judgement means examining the evidence, questioning assumptions and accepting that reasonable people may weigh the same facts differently.

It also requires honesty about our own priorities. Wanting a good return is not wrong. Often, it is about real responsibilities. The challenge is to pursue it with your eyes open.

It’s also about how you behave

Ethics is not only about what you invest in, but how you act as an investor. Students who build team portfolios in the STADIO Investment Society or compete in the JSE Investment Challenge face this in practice, and so will anyone who later manages money, advises clients or works in business.

Trading on information the market does not yet have is insider trading, and it is illegal in South Africa. If you promote a share or a “guaranteed” scheme in a group chat and benefit when others buy, they deserve to know that. And in any team decision, sharing credit for wins and owning your part in losses is an ethical choice, not just good manners.

Five questions to ask before you invest

You don’t need a philosophy degree to invest ethically. Start with these:

1. Where does this company’s profit actually come from?
2. Who could be harmed if this business keeps doing what it’s doing?
3. Would I be comfortable explaining this investment to my family?
4. Am I acting on information everyone has, or on information I shouldn’t have?
5. If this promise sounds too good to be true, who will pay when it isn’t?

Practical steps to help you answer them

• Read past the headline numbers. A listed company’s integrated annual report explains how it makes its money, its risks and its impact on people and the environment. Start with the chairperson’s letter and the sustainability section.
• Check what others say, not just the company. Look at independent news coverage, regulatory announcements and labour or community disputes. If the company’s story and everyone else’s story don’t match, find out why.
• Compare promises with progress. A target to reduce emissions or improve working conditions means little on its own. Look for whether the company reports actual progress year after year.
• Know what’s inside your fund. If you invest through a unit trust or ETF, the fund fact sheet lists its top holdings. You may own more companies than you realise.
• Verify before you trust. Before investing through any person or platform, check that they are registered with the Financial Sector Conduct Authority (FSCA). If they aren’t, walk away.
• Decide your own line in advance. Think about what you would and wouldn’t invest in before an attractive opportunity tests you. It is much easier to stick to a line you drew calmly.
• Write down your reasons. A few sentences on why you chose an investment, including any concerns, helps you think clearly and makes it easier to revisit the decision later.

Re-centering ethics

Global Ethics Day 2026 asks us to re-center ethics. In investing, ethics should not be an afterthought once the financial analysis is done. Nor should it replace careful analysis. It belongs inside how we assess opportunities, weigh information and justify our decisions.

The goal is not to find investments free of difficult questions. It is to develop the judgement, curiosity and integrity to engage with those questions responsibly. The next time you evaluate an investment, pause and ask: Who pays for this return? The answer may not change your decision. But it should inform it.