Ethical Investing: What It Is and How to Do It

It's growing in popularity. So how are investors empowering themselves by putting their ethical values at the forefront?

Ethical investing is the practice of allocating capital in a way that takes into account environmental, social and governance (ESG) criteria. It is growing in popularity as investors aim to achieve financial returns while also creating positive social and environmental impacts.

In fact, women are better investors than men when it comes to ethical investing because they are more likely to prioritize goals such as making a positive impact on the world, greater attention to risk management, and a deeper understanding of non-financial issues like sustainability. With women leading more and more of our private investments, ethical investing can lead the charge toward addressing global challenges such as climate change and gender inequality.

What is ethical investing?

Ethical investing is an empowering investment strategy that puts people and ethical values first, aiming to secure good returns while doing so. Rather than accepting the all-too-common and suspicious illegal deals on the rise, ethical investors are driving real change in the market by demanding that the companies they invest in treat their employees with respect, offer healthy products, and stay away from unethical practices. This ethical way of investing builds stronger communities and ethical business practices that sustain our world for many generations to come.

Who are ethical investors?

Ethical investing is gaining traction as a popular and meaningful way for investors to put their money where their values lead. By carefully selecting companies to invest in, ethical investors have the power to impose their values by avoiding companies that produce tobacco or own investments in corporations that do, or those with poor environmental records, promoting human rights and diversity, supporting ethical supply chains etc.

This type of investing sends a strong message to corporations while also aligning investor wealth with their ethical beliefs. The result is an empowering ethical stance that puts the control squarely in the hands of informed decision makers: ethical investors.

Women are ethical investors

Women appear to be leading the ethical investing movement among individual investors. Studies have shown that women are more likely than men to prefer ethical investments, which demonstrate their dedication to values-based practices in the financial world. At a time when ethical finance continues to grow in popularity and importance, women can take pride in being at the forefront of positive change in this sector. These ethical decisions provide a helpful boost to communities and businesses around the world and show that women can drive true social impact through their choices.

Types of ethical investments

1. Socially responsible investing funds (SRI funds)

SRI funds specialize in this kind of investing, where the investor’s moral value is given paramount importance in investment selection, avoiding controversial areas such as gambling, firearms, tobacco, alcohol, and oil. By doing so, SRI funds allow ethical investors to take control of their financial future while simultaneously delivering on their promised ethical commitment. This kind of ethical investing is an empowering tool for those looking to make ethical decisions that have a long-lasting impact.

ESG funds

With ethical investing on the rise, ESG funds are increasingly attractive to many investors. By taking environmental, social and governance risks into consideration during their decision-making process, they cause material impacts on a company's performance while maintaining the same level of returns as one would with traditional practices. 

So not only do ethical investments look good on paper, results often reflect it in reality. It's no longer a compromise between ethical values and profitable investments; there is now an enjoyable relationship between the two. Therefore, if you're ready to take your ethical investing to the next level, then ESG funds could be your start.

Impact funds

Impact funds provide social responsibility investors with an exciting way to see a return on investment. They are all about ethical investing – aggressively looking for responsible companies that provide ethical products and services, whilst still being mindful of creating strong returns for their clients. 

It's a distinguished form of investing that finally gives ethical investors the chance to make both ethical investments and financial gains - no longer do they have to put ethical values at odds with financial success. So, if you want to invest in a way that is in line with your ethical beliefs, jump on the impact fund train and ride it all the way to financial success.

Faith-based funds

Faith-based funds offer investors a unique opportunity to manage their finances in accordance with religious beliefs and values. This approach to investing focuses on aligning money with religious ideals, without sacrificing the overall financial performance of an investment portfolio.