- Gain insight into ethical investing from the perspective of an investor. Understand the principles and motivations behind ethical investment decisions and discover how you can use them to benefit your portfolio.
Ethical investing is for every investor because they have different morals and values they would like to uphold in their investment. When choosing to invest ethically, investors are selective with their capital because they get to decide where it goes and which causes they want to support. Their investment must align with their ethics and morals.
Investors want companies that are transparent and trustworthy and where there is zero conflict of interest. Investors have different views about ethicality definition depending on the causes that interest them. Below are the most common perceptions that investors use to make decisions.
1. Socially Responsible Investing (SRI)
What would be an investor’s view of companies with positive social impacts? An investor will look at how a company behaves on social and human levels within the company and community. Most investors’ values align with their policies and political affiliations.
An investor will seek to know about the firm’s stand on low wages, poor working environment, religious beliefs, marriage, family life, social justice causes, and labor rights. Companies striving to leave a positive social impact will appeal to investors if they share the same values. An investor will avoid companies that make profits out of harmful activities.
2. Environmental, Social, and Governance (ESG) Investing
An investor will look at the ethicality definition in ESG investing by looking at how well a company advocates for the environment and participation in the community. A value-based investor is also likely to look at a company’s policies towards leadership structures and employees.
The ESG criteria is a good measure for an ethical investor to use to determine whether a company upholds the same values as they do. By looking at a company’s overall behavior, one can get a good feel of the company’s environmental, social, and governance impact, as this also sets the company’s values and tone.
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3. Sustainable Investing
Sustainable investing involves protecting and preserving the environment. When a company conducts business through environmentally conscious practices like recycling materials when making new products, producing alternative energy sources, and managing waste responsibly, an investor can conclude that it meets the ethical definition.
4. Impact Investing
Impact investments focus on social, health-related, and environmental causes. An investor puts their money in ventures that align with their values and morals while making profits and making positive impacts.
5. Faith-based investing
Religious beliefs and faith will influence an investor’s perception. They will exclude any company that does not uphold the same religious beliefs as them. A company’s stand on divorce, human cloning, stem research, medically terminating pregnancies, and other issues that touch on religious beliefs will affect an investor’s investment choice.
Conclusion
Ethicality definition depends on the investment criteria available and an investor’s choice of which to take on for investing. Any investor must evaluate these criteria thoroughly to avoid companies that misrepresent their causes, products, and services and avoid getting conned. When an ethical holding does well, investors feel happy because they benefit financially and emotionally as they get fulfillment for making a positive impact in the world.
