When you think of investing, what comes to mind? Maybe the image of rich men in business suits, or a stock ticker scrolling across the bottom of the screen. But things are changing and there are other ways to invest your money and make a profit while also making the world a better place.
Ethical investing is an investment strategy that focuses on companies that have positive social and environmental impacts as well as long-term profitability. The beauty of it is it’s not just about pandering to some altruistic concept of corporate good; it’s about putting your money where it will grow.
Here is more information about how ethical investing can open some great investment opportunities for you, along with expert advice on how to go about doing so effectively and safely by keeping a keen eye out for socially responsible companies.
What is Ethical Investing?
When most people think about ethical investing, they imagine investing in things like environmentally friendly companies or businesses that don’t have anything to do with making products that have a destructive effect on society such as alcohol, guns, and tobacco.
However, the scope of ethics goes beyond simply avoiding companies with harmful products and services. The practice allows you to support the companies that are making the world a better place. It involves investing in companies with qualities that benefit society as a whole—things like making products more accessible to a larger portion of the population, creating jobs, and supporting non-profit organizations.
How to Research and Find Socially Responsible Companies
While this may seem easy on paper, the real effort lies in finding these companies. Don’t commit to socially responsible investments if you’re only interested in making money and nothing else. It’s important to only invest in companies that are truly making a difference hence the need for diligent research.
Sure, you could consult with an asset management company responsible for investing money on behalf of clients. Your preferred asset management company could suggest some socially responsible companies but if you want to put your money into something you value at heart, then you might want to look into the niche on your own.
There are a few questions you can ask to find the most promising companies to invest in. They include:
- Is the company committed to social progress – A company that’s simply adding social responsibility to its mission statement because it’s the “in” thing to do isn’t going to be a worthwhile investment.
- Is the company operating in an industry with potential – Finding new industries is extremely difficult, and most industries are already saturated with competing firms.
- How long have they been in business – You want to invest in companies that are stable and have proven themselves as worthwhile investments. New companies are always risky.
- What is the management’s investment philosophy – Fund managers who have a long track record of success are often great sources of information about the best companies to invest in.
The Bottom Line
Investing in socially responsible companies can be a great way to make money and improve the world at the same time.
However, you’ll need to do your research and invest in companies that are actually making a difference. There is, after all, a steady stream of information about socially responsible investing (SRI), which includes ethical investing and impact investing.
You’ll find thousands of companies to choose from, and it’s up to you to decide which ones are worth your money.