There are numerous things to assume when it comes to personal finance. What should you invest in? How can you make money grow quicker? Which account should you put your savings into? The list of considerations goes on and on.
One area that might not immediately spring to mind is ethical investments, but they’re an important one nonetheless.
Ethical investing is exactly what it sounds like – putting your money into things that align with your values. It’s an area that perhaps not everyone thinks about, but as the world becomes a smaller place, so too does its consciousness when it comes to corporate responsibility and practices.
It might seem like an unusual choice, but there are a number of convincing reasons why more people are choosing to invest responsibly.
This guide outlines all you need to know about ethical investments and what it involves. In addition To finding fresh financial insights using quantamental approach, our team makes use of the breadth and specialness of our integrated data and analytics solutions.
Table of Contents
What Are Ethical Investments?
Whereas some people might be willing to ignore the social and environmental impact of a company if they believe it will help their bottom line, ethical investors want their investments to be a force for good.
Ethical investing aims to promote social good, environmental sustainability, and positive impact on society by reinforcing the value of responsible corporate behaviour.
Examples of Ethical Investments
There are many examples of ethical investments. While the list varies depending on who you ask and what kind of criteria they use, the following investments are generally considered ethically sound:
- Sustainable and renewable energy companies
- Automobile manufacturers that are committed to electric vehicles or self-driving technology
- Companies with a strong promise to corporate social responsibility,
- Pharmaceutical companies that focus on developing drugs for rare diseases, or
- Healthcare service providers that focus on improving healthcare access for people in developing countries
- Companies that protect human rights in their sourcing of raw materials,
- Companies that support fair trade practices
- Companies that support equal pay for men and women
- Organisations that promote financial literacy and education
- Real estate developers who support affordable housing and living wages
- Financial institutions that have a strong commitment to fair lending practices and more.
Reasons To Invest Ethically
Support Positive Social Impact
Ethical investing can also help you make a positive social impact by investing in companies focused on solving significant social challenges like clean energy, eradicating pandemics, improving access to healthcare, and more.
Help You Sleep Better at Night
If you have ethical concerns about the companies you invest in, like those that profit from fossil fuels and fossil fuel-powered cars, you may feel like you’re compromising your values by profiting from them.
Ethical investing, on the other hand, helps you sleep better at night knowing that you’re not profiting from unethical practices.
Lead to Better Investment Outcomes
There is evidence that ethical investing is an important factor in assessing risk and return. Several studies have found that investments that are considered ethically sound actually provide better returns than those that are not ethically sound.
Ethical investing can also help you build a more diverse portfolio by providing you with more options that go beyond the traditional stock market.
The Bottom Line
Ethical investing is about more than just doing good — it can also help make your investment portfolio more robust and help you hit your personal finance goals.
That said, ethical investing isn’t a one-size-fits-all proposition. Different people have different values and beliefs, and making sure that your investments reflect those values is an vital part of building a strong and sustainable portfolio.
If you’d like to make sure your investments are as ethical as possible, start by making a plan for your investment portfolio. Once you’ve got that in place, you can use screening tools to identify ethically sound companies and make sure that your money is being used for good.