Seek Profit or Impact? A Rabbi's Advice for Investors
Many of us feel a tension when it comes to money and wealth. And that’s a good thing.
For thousands of years, the leaders of the Jewish people have debated various Jewish principles, in a practice known as machloket, producing huge volumes of ethical and legal text. Jewish sages compiled their first “big book of Jewish law,” known as the mishna, nearly two millennia ago. They filled its pages with machloket - of the hundreds of chapters, only one contains no disagreement. A machloket reflects a tension in values, and the rabbis of the time praised engaging in machloket. In fact, in the ancient rabbinic compilation The Ethics of our Ancestors (5:17), they assumed that any truly worthwhile machloket would last forever. The practice of machloket honors the tension we live in our daily choices between two values. For example, the tension between personal profit and making a social impact. Sometimes these two line up; but often we need to maneuver between them. Impact investing (or “responsible investing”) is the increasingly popular practice of seeking financial returns, and at the same time, measurable social or environmental impact. Jewish wisdom can help us navigate these sometimes complementary, sometimes competing goals. Seeking Profit is an Important Pursuit The urge to make money, say the rabbis, is a holy urge. They tell a story (Talmud Yoma 69b; see also Breishit Rabbah 9:7) of a time when humans captured the yetzer hara, the self-centered urge. The world slowed to a stop. No eggs were fertilized. There was no food for the community. If it weren’t for the self-centered urge, no houses would be built, no children would be born, no commerce would happen. The self-centered urge to grow our own wealth is a crucial and healthy part of society. Seeking Justice is of Utmost Importance Jewish wisdom obligates us to look beyond ourselves, to care for our society and our world. Rabbi Tarfon shares a famous line: “It is not upon you to finish the task, but neither are you free to desist from it” (Ethics 2:16). Jewish law offers an obligation, a mitzvah, to make the world a better place in every way one can, with one's actions and investments. The Jewish people inherited this mandate early on. When God began to build a relationship with Abraham, the first Jew, God instructed him and his descendants in what is arguably the mission statement of the Torah (Bible): Abraham and his descendants should “keep the Path of God, to help others and pursue justice.” Investing Can Help With the Pursuit of Justice During the Middle Ages, one of the most important thinkers in Jewish history, the Rambam (also known as Maimonides), compiled his fourteen-volume Jewish legal code. The Rambam ranked a ladder of steps of righteous giving. For example, giving anonymously ranks higher than a known gift. Highest of all he ranked providing a loan to help someone get up on their feet (“Gifts to the Poor” 10:7). A loan isn’t really a gift at all, but a way of investing in a person’s success. Essentially, the Rambam, 800 years ago, was advocating impact investing as the most righteous way to help people. Doing Good While Doing Well Nowadays, impact (or “responsible”) investing strategies may achieve quite favorable returns. Not to use our wealth for good might be seen as a selfish choice - and Jewish wisdom guides us not to act like midat Sodom (the selfishness of Sodom). Near the beginning of the Torah, Abraham’s brother Lot lives in the city of Sodom, a city so evil that God cannot find even ten people of good character to redeem it from destruction. What made the people of Sodom so evil? The sages understand that their great sin was a particular kind of selfishness: they refused to share access to their resources even when it cost them nothing (Ethics 5:10). For example, if I owned a forest, and you wanted to graze your pet goats there, in a way that caused no damage to the forest, my forcing you out represents the selfishness of Sodom. The rabbis ruled that people should not act with the selfishness of Sodom, but instead permit access to their resources. They even allowed courts to enforce this kind of sharing (Kesubos 103a). So too with our investments - if we can make a difference by investing ethically while still realizing a return on investment, then we ought to do so. Accumulate Wealth With Humility The Torah accepts wealth generation, assuming one acts ethically and with humility. Near the end of the Torah, the Israelite people stand on the edge of the Promised Land, filled with abundance. God chooses this moment to remind them: “Be careful in case, when you have eaten your fill, ...and your silver and gold multiplies, that you then grow spiritually arrogant and forget the Lord your God, who brought you out of Egypt, out of slavery...and you say to yourself, ‘My strength and my labor made for me this great wealth.’...For it is God who gives you the power to gain wealth.” Profit vs. Impact - Judaism Says Both Jewish wisdom doesn’t expect people to have all the answers - even two thousand years of brilliant sages haven’t been able to resolve the deep tensions around balancing profit and social good. But we are expected to live both values as best we can. The rabbis of the Talmud share a startling idea. At the moment of Divine judgment in the World to Come, they explain, the first question a person will be asked is not “did you pray,” nor “did you keep kosher”, but rather, “did you transact your business dealings ethically?” (Shabbes 31a) Jewish tradition gives primacy to conducting business pursuits in ways that make a positive impact. It calls on us to ask ourselves about our investments: are we using our wealth, not just to help ourselves, but to create a more just world? Thankfully, the responsible/impact investing movement provides many options for investors to generate both profit and impact.