When people invest, they already have a goal in mind – they want their investments to generate significant returns. That doesn’t mean, however, that making a profit is their only objective. They can be passionate about worthy causes as well. They can be passionate about social, ethical, and environmental issues. And because of these concerns, many seek to take part in the ethical revolution by creating a positive impact in the world with their investments.
Also called green, socially responsible, or sustainable investing, ethical investing is a way of making money by investing in companies that are socially responsible and do no cause harm to the environment and to other people. In ethical investing, investors see to it that their convictions coincide with their monetary goals.
Ethical investors want their investment decisions to reflect their values and principles in life. They take the decision-making process very, very seriously. They would scrutinize a company and would be interested in knowing if its corporate goals support environmental and social responsibility. They would normally stay away from companies that engage in unethical business practices or those who offer dubious products and services.
From being an investment practice preferred by a limited number of investors, ethical investing is now mainstream and widely accepted. It appeals to a broad range of audience that includes individuals, religious groups, and foundations. The increasing popularity of ethical investments is due to the following reasons:
- Investing in a company that promotes social and environmental responsibility is safer because is less likely to be besieged by lawsuits.
- Investing in a company that maintains a positive image is sensible because it is more likely to perform well and produce bigger long-term investment returns.
- Supporting a company that makes a positive impact in the world will make investors feel good knowing that their money is making a difference; and
- Investors now have a lot of ethical investments to choose from and they can easily match their investments with their ethical standards.