Mainstream investors are reportedly only interested in environmental, social and governance (ESG) issues that will have a “material” impact on the company (higher or lower profits) — more specifically a near-term impact. On the other hand, traditional ESG investors do not want to invest in companies that have a negative impact on society or the environment — that are a risk to the community and ecological balance, not just to that company.

Social investors often assert that companies that manage their social and environmental responsibilities will ultimately do better financially. Sometimes it turns out, however, that the negative ESG risks are not material risks to a company in the short term.

Laws and regulations have not caught up with the latest externalization of impacts. Even where they have caught up, the legal costs and regulatory fines are often minimal as a percentage of revenues that can be obtained by ignoring and externalizing these impacts.

Legal costs, paying for protection by security forces of a foreign state, etc., are all part of the “cost of doing business”. Generally there is no material impact on the company in the relative short term (next quarter to next year). The stock price stays up or even improves, ignoring these factors.

Focusing a moral lens on corporate behavior more clearly reveals potential long term impacts, sometimes five to ten years before they may become relevant to stock price. Many mainstream investors are not focused on the long term.

It may be, however, that this disconnect is narrowing as communication improves. Word travels faster today. Indentured servitude/slavery in the Amazon or child labor in western Africa has the potential to do brand damage - a real, though sometimes “intangible” material cost.

Investors learn that people are dying for lack of affordable drugs and find it troubling. Sweatshop labor is no longer acceptable mainly because investors and customers are learning more about it from nongovernmental organizations and investigative reporting.

The long-term focus of the moral perspective may actually be shortening because of the speed of communication today.