Hi SayWhatAgain

I'm interested in how many degrees of separation you look to with your investments.

i.e. Caterpillar for example who build the D9's. Does this mean that Bluescope who supply the steel to Caterpillar, Stealth Group who sell the welders to the dealer network who put the D9's together, Hubspot who provide the CRM to Steath etc. are all off limits too?

(no idea if any of the above happens IRL but you get the point?)

This isn't a criticism but a genuine interest in how you go about it.

Hey @TacconG

Thanks. I appreciate your curiosity about how I approach this, and I’m happy to share my perspective.

For me, the guiding principle is clear: human rights violations are a firm boundary. When a company has a direct and conscious link to such violations—like eg Company A, whose products are knowingly used in operations tied to documented human rights concerns—I view that involvement as a reason to exclude them from my investments or divest if that is the case. In these cases, the degrees of separation become less relevant because the connection is intentional and well-established. For instance, if company A isn’t an unaware supplier caught in a distant supply chain; they actively provide equipment or services knowing they contribute to displacement, harm, or systemic injustice.

That said, I recognise there’s a grey area when we look further down the supply chain. For example,  if companies B, C, or D, as you mentioned, do not have direct knowledge of or control over how their offerings ultimately contribute to such outcomes. Their involvement might be several steps removed, and they may not even be aware of the final application. 

This is where personal preference and interpretation come into play. I tend to focus on evidence that shows a clear and conscious role—rather than casting a net so wide it includes every tangential contributor. That said, I understand others may draw the line differently, choosing to exclude any company with even an indirect link, depending on how strictly they interpret their ethical framework.

Ultimately, my approach is personal, grounded in a commitment to avoid investing in entities directly tied to human rights abuses, irreparable environmental harm, or systemic injustice. I don’t intend to judge those who draw the line elsewhere—some may prioritise degrees of separation or factor in broader geopolitical considerations—but I hope this gives some clarity on how I navigate these choices. It’s a nuanced space, and I’m always open to hearing how others approach it.

I’d be interesting to hear other views :)

Well explained @SayWhatAgain and I agree 100% with what you've said and I follow the same personal guidelines, however I do extend that a little further to all weapons manufacturers, and drone manufacturers who are aware that their drones are being used to carry bombs and other weapons. I also don't look too far down the supply chain, but if a company makes a product that is either designed to kill or harm people, or they make a product that is designed to transport bombs, so facilitating death, then I pass.

That's why I do not get involved in commentary here on EOS or DRO, and I won't hold those companies. I make no judgement of others. It's just a personal decision of mine. I also won't hold gambling companies, or pokie/slot-machine manufacturers, or tobacco companies. When I realised a few years back that Woolworths were the largest owner of pokie machines in Australia through their hotel chain, I sold out of Woolworths, then after they spun their alcohol and hotels out into Endeavour Group (EDV), I did consider Woolworths (WOW) to be back within my investable universe and have briefly held them at various times since then - mostly for a short term trade. I have other guidelines too, but it's just personal preference as you say.

Good question from @TacconG and I tend to have a similar perspective to @Bear77.

My focus tends to be on the core products and services of the firm and their primary use cases.

I also do consider "red flags" in supply chains. For example, a clothing manufacturer that sources cotton from Xinjiang, China, or an electronics firm that has a known key supplier with poor practices on human rights (e.g., known UN SDG violoations) - if I became aware of this, I wouldn't hold them.

However, a firm that provides a widely used product where some customer might have practices that are "red flags" for me is not something I will take into account. So for example, taken together $MSFT, $AAPL, $NVDA and $GOOG account for about 6% of my total asset base. No doubt they supply many odious countries, firms and individuals because their products are so ubiquitous. But that is beyond anything I can practically manage,

I also tend not to invest in defence, tobacco or gambling (apart from $JIN) not so much for any ESG reason, but more because I am not interested in these industry sectors. All my holdings are in sectors that I study and enjoy researching. To quote many others before me, I want the companies I've invested in to grow strongly because I think having more of their products in society and in the world is a good thing. I can;t sya that for defence, gambling or tobacco.

I know the defence sector is very important for our national security and the national security of every country. And, therefore, businesses in the defence sector are an important part of our society. But having said that, if I was investing in that sector, I would only do so if the firm had strong controls to ensure their products were not supplying terrorists, entities fighting proxy wars to destablise nations, or commiting war crimes or crimes against humanity as judge by the global institutions (UN; ICC etc.) . So this is a problematic area because, even though the Australian Goverment has certain laws and rules about these things, I am not 100% confident that our government will always do the right thing because of our securty depedency on the US. So, investing in the defence sector would be a very problematic area for me, because I would not be able to have transparency that my ESG boundaries were being applied.

But then again, through my very sizeable global ETF holdings, I am absolutely invested in the US and European Defence Majors, and therefore directly benefitting from the geopolitical turmoil of recent years. And I don't have sight as to where all their products have ended up.

Here I have to apply a practical text. It is not practical for me to selectively opt of the minority of businesses in my global ETFs in my portfolio that fail my ESG filters. And I won't invest in ESG funds, because I think there is a lot of "greenwashing" going on in them.

Everyone has to make up there own mind. But I think as investors it is important that we ask ourselves the question, and make informed, positive decisions as to where we will and will not invest our capital.

Personally, it is something I should give more thought to, so I am grateful for this thread.

I am somewhat surprised at the approach of some people on ethical grounds. I hold BIS and am comfortable in doing so.

Whereas some see BIS as a 'spreader of death' I see it as a manufacturer...and a unique manufacturer at that. It's the only Quench & Thirst (Q&T) manufacturer in Australia. Now, that is a most important fact for Oz as an island country...a country where our once solid ally has walked away and there are two predators in our area who see Australia as the jewel in the crown.

Q&T steel is hardened steel used in flak jackets - okay some are anti this because BIS is supplying Israel.

Frankly, I look at the product (flak jackets) as a life saver...which is the sole reason why IDF bought the product in the first place. The BIS product itself cannot kill anyone.

I also find the persistent sit ins which disturb BIS modus operandi as misguided. If these 'flower people' (and Lord knows I saw plenty of them in my Uni days and I'm pretty sure they haven't shot the lights out in their latter lives) want to make a difference with the surplus time on their hands, go sit outside the Israel Embassy - better still - go and harass the Big 3 - USA China and Russia.

You don't need to be Nostradamus or Winston Churchill to see where the geo politics are headed. We will badly need Q&T for our Bushmasters and submarines and other military equipment once China has digested Taiwan and feels the need to secure/own our natural resources.

I am backing the defense of Australia and like it or not, we cannot win with broomsticks, we need guns and strong deterrence. A stronger manufacturing base is a good start.

Ha! I’m a little taken aback by some of the insinuations in your message.

Labelling those who care about human rights as 'flower people' with 'surplus time' seems rather dismissive. More to the point, I find the idea that a company's role in 'protecting the nation' excuses its dealings with armies engaged in oppression, apartheid and ultimately, genocide to be a charmingly convenient bit of nationalism. 

No one here said BIS is a "spreader of death"—that’s your rhetoric. The issue, as I see it, is not what BIS produces in isolation but who it's knowingly supplying. A company dealing with an army spreading death and destruction in occupied territory doesn’t get a moral pass just because its product can also be used defensively.

The same reasoning might have justified selling steel to, e.g. South Africa's apartheid regime; after all, a robust manufacturing base is crucial for defence, and why let a system of racial oppression, forced removals, and violence stand in the way of progress? 

I prefer to invest in companies that don't require such moral acrobatics, no matter how vigorously the patriotic flag is waved. That said, as I noted earlier, I don’t judge others for drawing their lines differently. That’s the beauty of a free economy—we each get to decide where our values intersect with our capital.

It's important to respect diverse perspectives, even when they differ so markedly, and I hope we can all appreciate the value of this thread.

Different strokes for different folks.

Ultimately, ethical considerations are deeply personal, and each of us must approach them in a way that feels meaningful and authentic.

That said, it’s always valuable to explore alternate perspectives—not only to understand the broader range of motivations in the market but also to help us stress-test our own views. Engaging with other viewpoints can be a powerful way to refine our thinking.

As long as the discussion remains respectful (and I believe it has), it’s a conversation well worth having.

Of course, philosophers have wrestled with these kinds of questions for centuries, so it’s unlikely we’ll reach a definitive conclusion. But even without objective answers, there’s real value in the process.

@SayWhatAgain - clearly I must say it again

Your quote of my quote - ‘No one here said BIS is a "spreader of death"—that’s your rhetoric.’

Clarification: Not my rhetoric - expression used by the flower power people staging disruptive sessions against BIS.

Specifically, because BIS supplied Israel, both the company and the product are branded the same.

To the best of my knowledge, BIS have never blacklisted supplying Hammas or any of the other ideologically opposed forces of Israel. Perhaps they should because the BIS product saves lives.

As a matter of fact, BIS are partnering with Hanwha to supply field guns to Egypt…no hubris from our ‘garden-scented, time enriched, academically superior navel gazers’ on that one. And howitzers do kill…in this specific case, likely IDF.

I will leave the moral high ground to you & others, I’m just an old value investor interested in my country and the future of my family. Frankly I don’t like the gathering clouds though I will likely not see it play out. Like it or not, the world is polarising and deterrence is the best weapon. I doubt whether Putin, Xi or Fat Boy give a continental fig about the Marquis of Queensbury rules, the gentleman’s code, Kumbayas or meditation anymore than Bin Laden, Gadaffi and all that crew.