What Happens to Your Values When You Buy an Index Fund?
When you buy an S&P 500 index fund, you are not choosing companies. You are buying the 500 largest U.S. corporations weighted by market capitalisation. Your money disproportionately flows to the biggest names at the top -- and those names carry documented records of regulatory violations, labour disputes, and environmental damage that most investors never examine.
The structural problem is straightforward: the larger a company gets, the more of your money flows into it, regardless of its conduct.
We scored the top nine holdings across 11 ethical dimensions using court filings, regulatory penalties, and investigative reporting. The average integrity score across these nine companies is negative.
For a deeper dive into how popular ESG-labelled funds compare, see our analysis of popular ESG ETF holdings. And for the full picture across all 500 companies, read our S&P 500 ethical scores analysis for 2026.
Where Your $10,000 Goes
Index funds allocate your money based on market capitalisation. If you invest $10,000 in an S&P 500 fund, here is roughly where it flows based on recent index weights:
| Company | Approx. Allocation | Integrity Score (Avg.) |
|---|---|---|
| Apple | ~$700 | -3 |
| Microsoft | ~$650 | -5 |
| NVIDIA | ~$600 | -10 |
| Amazon | ~$400 | -25 |
| Meta | ~$250 | -39 |
| Alphabet | ~$400 | -29 |
| JPMorgan Chase | ~$150 | -17 |
| ExxonMobil | ~$120 | -20 |
| Lockheed Martin | ~$30 | -14 |
Roughly $3,300 of a $10,000 investment flows to these nine companies alone. The weighted average integrity score across these holdings is negative. Not one company in this group scores positively on average.
That is not a failure of investing. It is the structural consequence of weighting by size instead of conduct.
The Full Score Card
| Company | Ticker | Integrity | Workers | Data & Tech | Climate | Peace | Avg. Score |
|---|---|---|---|---|---|---|---|
| Apple | AAPL | -20 | 0 | +10 | -40 | -30 | -3 |
| Microsoft | MSFT | -20 | +30 | -40 | -30 | -50 | -5 |
| NVIDIA | NVDA | +20 | +20 | -50 | -30 | -70 | -10 |
| Amazon | AMZN | -50 | -50 | -50 | -30 | -40 | -25 |
| Meta | META | -60 | -30 | -70 | -10 | -50 | -39 |
| Alphabet | GOOGL | -30 | -40 | -70 | -30 | -80 | -29 |
| JPMorgan Chase | JPM | -40 | 0 | -30 | -20 | 0 | -17 |
| ExxonMobil | XOM | 0 | -10 | -50 | -50 | 0 | -20 |
| Lockheed Martin | LMT | -20 | -30 | +10 | 0 | -70 | -14 |
Scores range from -100 (worst) to +100 (best). Avg. Score is the mean across all 11 ethical dimensions.
How Much of Your Index Fund Goes to Defence Contractors?
Five of the nine companies in this analysis have documented involvement in military contracts or defence technology.
Lockheed Martin derives 73% of its net sales from U.S. government contracts. The company agreed to pay $29.74 million in February 2025 to settle allegations of defective pricing on F-35 aircraft contracts. Over 900 UAW members went on strike in Orlando and Denver in 2025. It scored -70 on No War, No Weapons.
Alphabet scored -80 on Peace, the lowest in this analysis. The company continues to expand its $1.2 billion Project Nimbus contract with the Israeli government and military for AI-based systems and holds a share of the $9 billion Joint Warfighting Cloud Capability contract with the Pentagon. When employees protested Project Nimbus in April 2024, 28 workers were terminated.
Microsoft holds a $22 billion contract for HoloLens augmented reality visors for the U.S. Army. Its investment partner OpenAI changed its terms of use to allow "national security use cases," removing a previous ban on military use. Scored -50 on Peace.
NVIDIA scored -70 on Peace. Its Jetson microcomputers were found in Russian military drones in May 2024. The U.S. Justice Department accused Chinese nationals of illegally shipping tens of millions of dollars' worth of NVIDIA H100 processors to China.
Amazon scored -40 on Peace. AWS holds a share of the $9 billion JWCC contract and a $723.9 million contract with the U.S. Navy.
View the full defence stock analysis
Data Privacy Violations in Your Top Holdings
Three of the top nine holdings scored -50 or below on Safe & Smart Tech.
Meta scored -70. The company paid a $1.4 billion settlement in July 2024 for illegally using facial recognition technology in Illinois -- the largest biometric privacy settlement in U.S. history. For a full breakdown of Meta's regulatory record, see its company profile.
Alphabet also scored -70. The company settled a privacy lawsuit for illegally tracking over 136 million U.S. users through Chrome's Incognito mode, requiring the purging of billions of files of personal data. Full profile.
Amazon scored -50. France's CNIL fined Amazon EUR 32 million in January 2024 for intrusive employee monitoring via handheld scanners that tracked productivity in violation of GDPR. Full profile.
ExxonMobil also scored -50. U.S. prosecutors alleged that an Israeli private investigator employed hackers to steal emails from over 500 accounts belonging to climate activists opposing ExxonMobil between 2015 and 2018.
Microsoft scored -40. The company disbanded its AI ethics and society team in March 2023. Its subsidiary LinkedIn was sued in January 2025 for allegedly disclosing private messages to third parties to train AI models.
The Carbon Footprint of Passive Investing
ExxonMobil scored -50 on Planet-Friendly Business. The company violated the Clean Air Act over 16,000 times between 2005 and 2013 at its Baytown, Texas facility. A federal court upheld a $14.25 million penalty for releasing over 10 million pounds of carcinogenic pollutants.
ExxonMobil is not a fringe holding. It sits in the top 30 of the S&P 500 by market capitalisation.
But fossil fuel exposure is not limited to energy companies. Apple scored -40 on Climate, with total emissions of 15 million tonnes of CO2 equivalent in 2023. NVIDIA scored -30, with emissions of 7.15 million tonnes -- an 86% increase from the previous year driven by data centre expansion. Amazon scored -30, with total carbon emissions reaching 68.25 million tonnes in 2024.
Combined, these five companies emitted over 128 million tonnes of CO2 equivalent in their most recent reporting years. All of them are held by every S&P 500 index fund.
Worker Conditions at Companies You Passively Own
Amazon scored -50 on Fair Pay & Worker Respect, the lowest worker score in this group. The company accumulated seven substantiated labour-law violations in three years, including OSHA fines for unsafe conditions and an NLRB finding in February 2025 that Amazon illegally enforced its Unpaid Time Off policy. For the full record, see Amazon's profile.
Alphabet scored -40. The company settled a $50 million class-action lawsuit in May 2025 for systemic racial bias and a $28 million lawsuit in March 2025 for racial favouritism affecting over 6,600 employees.
Lockheed Martin scored -30, with seven substantiated labour-law violations and a CEO-to-median employee pay ratio of 189:1 in 2024.
One contrast: Microsoft scored +30 on workers, the highest in this analysis. Globally, women at Microsoft earn $1.00 for every $1.00 earned by men in comparable roles. NVIDIA scored +20, with median employee compensation of $301,233 and a 2.5% voluntary turnover rate.
Corporate Integrity
Meta scored -60 on Honest & Fair Business. The European Commission has opened formal proceedings regarding deceptive advertisements under the Digital Services Act on top of billions in prior penalties. For the full breakdown of Meta's regulatory exposure, see Meta's profile.
Amazon scored -50. The company's $2.5 billion Prime settlement -- the largest FTC enforcement action of its kind -- covered deceptive subscription practices affecting millions of consumers. Full details.
JPMorgan Chase scored -40, with $892 million in ethics-related regulatory fines in three years. This includes a $290 million settlement related to facilitating Jeffrey Epstein's activities and a data breach affecting 451,000 retirement plan members that went undetected from August 2021 until February 2024.
Apple scored -20. The European Commission fined Apple over EUR 1.8 billion in March 2024 for anti-competitive App Store practices. The U.S. government filed a civil antitrust lawsuit the same month alleging monopolisation in smartphone markets.
Can You Invest Passively and Ethically?
Index funds track market capitalisation, not ethics. A company's weight in the index is determined by its size, not by its regulatory record, labour practices, or environmental impact.
This creates a structural issue: Apple, Microsoft, NVIDIA, Amazon, Meta, and Alphabet together represent roughly 30% of the S&P 500. According to our scoring, all six carry negative average integrity scores. Your diversification spreads your money across companies whose documented conduct may conflict with your values -- and you have no say in which ones receive the largest allocations.
That said, abandoning index investing entirely is not the only option. Screened index funds exist that exclude specific sectors or weight companies differently. The first step is knowing what you own.
For a broader view of how companies perform on integrity, see our breakdown of everyday companies' ethics scores. To understand how ESG ratings compare with independent evidence, read our ESG ratings comparison.
What You Can Do About It
Step one: audit your holdings. Most investors have no idea which companies dominate their index fund allocations or how those companies perform on ethical dimensions. Mashinii's free portfolio audit tool scans your holdings across all 11 integrity dimensions and shows you where your money goes.
Step two: identify your red lines. Maybe defence contracts are a dealbreaker. Maybe data privacy violations are. Maybe you accept fossil fuel exposure but not labour exploitation. Everyone's values differ, but you cannot align your portfolio with them if you do not know where the conflicts are.
Step three: make informed choices. With independently cited evidence, you can decide whether to stay with broad index funds, switch to screened alternatives, or build a portfolio that reflects what you actually believe.
How We Score
Mashinii scores over 6,000 companies across 11 ethical dimensions using court filings, regulatory penalties, and investigative reporting. Every score is backed by cited sources. No corporate self-assessments. Learn more about our methodology.
Advisors recommending index-fund-heavy portfolios can use Mashinii to surface ethical exposures clients may not be aware of, strengthening suitability conversations. Explore the advisor solution.
Audit your portfolio free at /audit. See exactly which companies you own, how they score, and where your values and your investments diverge.
Audit My Portfolio | Search Any Company | View Rankings
Mashinii provides integrity data for informational purposes. This is not financial advice.