How do you avoid a situation where companies making ethical choices are bought or outspent by companies (or in fact by shareholders) that got rich by exploiting every profitable opportunity that is legally available to them, including unethical ones?

From the point of view of any particular company the choice you're talking about may well exist, especially where the company is founder-led. But that doesn't mean the outcome you're hoping for can be achieved on a purely voluntary basis.

It may work in exceptional cases though, Apple being one of them.