a) It doesn't meet the Free Software Definition or Open Source Definition. What if you want to use the software for evil?
b) Who defines what Evil is? What if the author sues you on the grounds that you're using their software for a perfectly legal activity, the morality of which is widely accepted by the general public, but which they personally disagree with? For example, many authors who have written these types of licences are pacifists who disagree with the actions of Western military forces. Are said military applications "Evil"?
It adds conditions which make it incompatible with GPL, and similar licenses. And in general, it adds a completely arbitrary and uncertain condition, i.e. you can't be legally sure about what you can do with such software, i.e. you can more or less be sued by the author at his whim.
This has been discussed many times before, so search for more details. But the gist is that nobody agrees on what good and evil are, and they are not legally defined terms. For example, some people consider deaths caused by their own country's military as net good, while others believe all military killing is unquestionably net evil. Most people consider blood transfusions good, while some religious groups consider blood transfusions evil. Etc.
