By William Baldwin

Distinguishing good from evil on Wall Street is a challenge. Be grateful there are analysts doing most of the homework for you.

An ethical portfolio excludes the shares of irresponsible companies. Which ones are those?

Once upon a time that was a fairly simple matter. A handful of mutual funds had portfolios omitting certain industries, such as weapons, alcohol and tobacco.

Today, separating good equities from sinful ones is an industry unto itself. There are thousands of analysts at work judging corporations on their carbon footprints, gender equity, workplace diversity, mining disasters, animal testing, water usage, privacy breaches, occupational safety, boardroom scandals and impact on ocean life.

The bad news for investors struggling to align their portfolios with their beliefs is that ethical evaluations are very complicated. Do you put money into Tesla because it is part of the transition away from carbon, or shun it because of its workplace controversies? Own PepsiCo because food companies don’t pollute the atmosphere, or stay away because junk food causes obesity? Favor EQT because displacing coal with natural gas helps the planet, or refuse to own it because natural gas is still a fossil fuel?

Consider the chain of causation when somebody drives to work. The culpable party might be the oil company that supplied the fuel, the car maker that supplied a combustion engine instead of an electric one, the employer that didn’t have this worker telecommuting or the guy who got behind the wheel. An ESG evaluation might well assign black marks to any of the four players except the last one.

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