Many people have a misconception of investing being bringing solely material benefits. We’re here to fight this stigma. Investing doesn’t need to go against your moral compass. On the opposite, the modern world presents us numerous possibilities for building capital and supporting the environment or society at the same time. Today, we’ll explain what ethical investing is and how you can contribute to this altruistic matter. 

What Is Ethical Investing 

As the name suggests, ethical investing is an investing method where an individual’s moral values are the primary objective. This doesn’t mean that the investment return is neglected with ethical investment, though. Investors can still choose the most profitable projects while also evaluating them from an ethical side. 

Types of Ethical Investing 

Ethical investment is a rather vague term, as everyone’s moral is different. However, we can define three main ethical investment types:

1. Environmentally responsible investing (green investing)

Green investing is on the rise, supporting the global concerns regarding climate change and pollution. In this ethical investing type, the focus is placed on the environmental impact a project makes. Investors supporting this cause choose companies that either make a positive impact on nature or at least don’t harm it. For instance, such companies may utilize environmentally friendly production practices, plant trees, participate in recycling or grow crops. 

2. Socially responsible investing 

Socially responsible investing is based on widely-accepted societal norms, though these norms differ between different societal groups. The core objective of this investing type is bringing value not only to the investor themselves but also to people around. 

Just like green investing, socially responsible companies can either actively help society develop or simply not cause any negative impact. An example of the former is organizations supporting children or elderly people or companies building free public spaces. These are companies that impact the quality of life of people not related to the organization. An example of the former is companies that pay fairly to their workers and follow labor protection legislation. Such indirect social responsibility helps by giving jobs and contributing to the local economy. 

3. Moral-based investing 

Moral-based investing focuses on the investor’s personal views rather than the socially accepted norms, though they often align. For instance, if an investor doesn’t support gambling or firearms, they can choose not to invest in projects associated with these matters. However, not every moral-based investing has a positive impact on the environment or society. If an individual invests in a religious cult following own moral objectives, they may even harm society instead of helping it. 

Often, ethical investments incorporate all three objectives. An example of such a case is an investment in local farming and crop production. Unlike enterprise-level companies, local farmers follow environmentally friendly practices when growing and harvesting their products. They don’t cause harm to nature and thus are environmentally responsible. At the same time, investing in local businesses supports the local economy and gives jobs to numerous people. And while everyone must judge on their moral compass by themselves, most investors also support this cause personally. 

An important point to note is that avoiding unethical companies doesn’t always undermine their business success. By boycotting an unethical organization, investors reduce the potential shareholder poll. This, in turn, reduces the company’s stock price, making them even more attractive to investors who don’t mind unethical actions. 

How Do I Invest Ethically?

Now, let’s look at how you can contribute to ethical investing. It’s easier than it seems when you follow these four rules:

1. Define what’s ethical for you and for the society 

Outline your definition of ethics and decide how strict your guidelines are going to be. Will you rule out investments in the oil industry entirely due to environmental harm, or will you support oil companies that treat their workers well? What direct or indirect value can an oil company bring to society? That’s an example of the questions you should ask yourself before moving on t the next step.

2. Conduct your research 

Ethical investing requires thorough research. Sometimes, destructive practices are well-hidden by companies, so it’s worth spending some time to find out how exactly they manage the business. Let’s assume you want to invest in a solar panel company. That sounds like a good matter, but first, you must research how the panels are produced and whether the company follows fair labor legislation. If the company pollutes air during manufacturing, all the environmental benefits or their panels get counterbalanced. 

3. Choose trusted investing platforms 

Trusted platforms supporting ethical investing can help you make the right decisions, eliminating the need for hours of research. Such platforms typically exclude certain activities from their project catalog or focus on a specific investing type, such as green investing. 

A trusted investing platform can also help with assessing investment risks. Legitimate crowdfunding platforms such as LendSecured evaluate the borrower’s credit rating, define risks, and calculate returns before posting any project to the catalog. By choosing ethical investing platforms, you can rest assured that your funds support a good matter while bringing you maximum profit.

4. Don’t forget about investing material objectives 

Even in the case of ethical investing, an investor’s primary objective is receiving returns. There’s no need to sacrifice your assets for a solely altruistic matter that doesn’t bring value to you personally. You should evaluate the project risks and returns and use a smart, safe strategy just like you would with any other investing project.

Ethical Investing Is a Philosophy 

Ethical investing brings pure benefits to the investor, environment, and society. Our mission is to help achieve common prosperity by supporting local farming and crop production practices. Each of our projects supports a great cause and is evaluated to minimize risks and maximize returns. Don’t hesitate to contact us directly for a consultation or with questions regarding the platform.