What's Next? Businesses That Make Profits?

I didn't get a chance to blog this last week, but there was big news in the institutional money management business and the area of "social investing." TIAA-CREF dumped the Coca-Cola Company from its list of companies that qualify for investment in its social index. To be fair, TIAA-CREF simply followed the advice of their consultants and made no particular judgement of Coke themselves, but the fact that they follow these silly consultants so blindly is not to their credit. I have never been a fan of "social investing" as a good investment strategy but in terms of advocacy or activism, it's A-OK by me because it is a market-based approach (rather than a gov't imposed solution). Nonetheless, the decision to dump Coke shows the extreme that this notion can be taken by the consultancy/NGO bureaucrat/activist mindset and the slippery slope that this concept was bound to start sliding down. Social investment began as a way to indentify for divestment businesses that engage in activities that are long-standing taboos of religious constituencies or broadly accepted cultural taboos like gambling, alcohol or pornography, so that churches and certain groups can be sure that their investments don't support activities they profoundly disagree with. But the expansion of criteria to trendy, manufactured crises and the bugaboos of elitist nannies, like child obesity, reveal the same unfortunate 'mission creep' that infects government agencies, NGOs, and activist groups in general. Give these people a deserved inch and they will find myriad dubious crises to confront and forever be raising the bar on what constitutes social responsibility. Social investing has gone from a way to cater to investors with deeply held beliefs to the aggressive promotion of pet causes (usually collectivist causes, go figure). That is fine by me, after all it is a market-based approach and I'd rather have that than something like Nick Kristoff's sugary beverage tax. Nonetheless, the social investing movement is going to be a victim of its own success, where gatekeepers with a missionary zeal and a bureaucracy's ambition to widen its net will hijack a good idea. The result will be new directions and new tactics that are far removed from the original intent and increasingly at odds with the core constituents' interests. Dumping Coke could be a sign that we are well along that path.