Ethical investing provides the potential for profit while allowing an investor to follow his or her conscience. Creating a successful portfolio does not mean discarding one’s social values, and ethical investments are a way to realize gains while encouraging social change. Below are several things to know before making the shift toward sustainable, eco-friendly, or socially responsible investment vehicles.
What is an Ethical Investment?
Unlike conventional approaches, ethical investment strategies do not stop at the bottom line; they also consider governance, social, and environmental factors. With an ethical investment, one may choose a negative evaluation approach that excludes companies or sectors based on subpar performance in these areas. Alternatively, positive screening involves active investment in companies with high levels of social responsibility.
Why are Ethical Investments So Beneficial?
With ethical investments, one can invest in ways that advance their financial goals while remaining in line with their values. Non-monetary returns can include support of responsible environmental practices and workplace policies. Certain groups, such as millennials, find these strategies very attractive. According to a recent report, 75% of millennials stated that they’d be willing to pay more for an ethical investment.
Can Ethical Investing Offer Greater Returns?
While the issue is up for debate, many have seen high returns with moral investments. A 2015 study of the relationship between governance, social, and environmental factors and investment performance found a positive link between the two. Other studies have concluded that sustainable strategies typically met and often outpaced conventional investment strategies.
Where Can Investors Learn More?
While investment company websites are an excellent starting point, many other resources can help investors learn whether their choices live up to their ethical standards. For instance, a mutual fund investor can look at the Morningstar Sustainability Ratings to determine how well a fund meets governance, sustainability, and environmental factors.
A person’s investment choices can make a significant difference in today’s business world. As investors start to think about more than returns, investment firms around the world are introducing products that meet the demand for socially responsible strategies. With ethical investing through the company of Shailesh Dash, one can plan for their financial future while supporting worthwhile causes.