Learn how to align your investments with your values. Discover ethical investing strategies for building a portfolio that makes a positive impact.

A simple guide to ethical investing: Your money, your values

Have you ever wanted to invest your hard earned money but felt overwhelmed by all the choices out there? It can be tough to figure out which opportunities are truly good for you and the world. Many people feel the same way, which is why a new way of thinking about money is catching on: ethical investing.

This approach, also known as socially responsible investing (SRI), is about more than just making a profit. It’s about putting your money into things that align with your beliefs and values. Think of it as a way to earn honest gains by supporting businesses that do good things for people and the planet. It’s a powerful way for both small and large investors to make their money work for them and for society at the same time.

On the flip side, we’ve all seen the consequences of unethical investments. Consider a company that pollutes rivers to save money. An investment in that company might look good on paper but could lead to an environmental disaster and huge fines later, hurting both the community and your investment.

Or think about a business that exploits its workers; while it might seem profitable at first, it carries a moral cost and a high risk of public backlash. These examples show us that a lack of ethical judgement can have real and damaging effects. The good news is that you have a choice. This article will show you 15 ways to start investing ethically and confidently.

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15 Ways to do ethical investing

1. Get to know what you believe in

Before you invest a single penny, take some time to think about what matters most to you. Are you passionate about protecting the environment, ensuring fair wages for workers, or promoting diversity? Knowing your core values is the first and most important step in ethical investing. It’s your personal compass.

Once you know what you care about, you can use those values as a filter for your investment choices. This helps you avoid putting money into industries or companies that go against your beliefs, making your investment journey much more meaningful and personal. It’s about making sure your money is a reflection of you.

2. Avoid the bad stuff with negative screening

This is one of the simplest ways to start. Negative screening means you decide not to invest in certain companies or industries that you consider harmful. Think of it as creating a “do not invest” list.

For example, you might choose to exclude companies that are involved in tobacco, weapons manufacturing, or fossil fuels. This approach is straightforward and helps you ensure your money isn’t supporting activities you morally oppose. It’s a clear way to align your portfolio with your principles.

3. Actively choose the good stuff with positive screening

Unlike negative screening, this method is all about looking for the good. Positive screening involves actively seeking out companies that have a strong track record of positive social and environmental performance.

You might look for businesses that are leaders in renewable energy, have excellent employee benefits, or a commitment to community projects. This approach rewards good behaviour by channelling your money towards companies that are making a real, positive impact on the world.

4. Look for the ESG label

When you see a company with a good ESG score, it means it’s been rated on its Environmental, Social, and Governance performance. These ratings help you quickly see how well a company manages its impact on the planet, its relationships with employees and communities, and how it is run.

Many financial experts now consider ESG factors to be a key part of a company’s long-term health. By including ESG in your investment decisions, you’re not just making an ethical choice but also a smart financial one, as these companies often have fewer risks and a more sustainable future.

5. Try thematic investing

Thematic investing means you invest in specific ideas or themes that you believe in. Instead of picking individual companies, you focus on a trend that has a positive impact on society or the environment.

For example, you could invest in a fund that focusses on clean water technology, sustainable food, or healthcare innovation. This allows you to directly support the causes you care about and be a part of the solution to global challenges.

6. Consider community investing

This type of investing is about putting your money to work right where it’s needed most: in local communities. This can involve supporting community banks or credit unions that provide loans to small businesses and low-income individuals who might not get help from bigger banks.

Your money goes directly towards creating jobs, building affordable housing, and strengthening local economies. The returns are not just financial; they are also about building a better, more resilient community.

7. Explore impact investing

Impact investing goes a step further than traditional ethical investing. The main goal here is to make a measurable positive social or environmental impact alongside a financial return. You’re actively trying to solve a problem with your money.

This could mean investing in a business that develops a new way to clean up ocean plastic or a fund that builds schools in developing countries. It’s a hands on approach where you can see the direct results of your investment.

8. Use your voice as a shareholder

Even if you only own a few shares in a company, you have a voice. Shareholder advocacy involves using your ownership to influence a company’s behaviour. You can vote on important issues or join with other investors to push for change.

For example, you might vote on a proposal to reduce a company’s carbon footprint or improve its labour practices. This is a powerful way to hold corporations accountable and encourage them to be more responsible from the inside out.

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9. Invest in green bonds

Think of a green bond as a loan you give to a project that benefits the environment. The money from these bonds is used exclusively to fund things like renewable energy projects, energy efficiency upgrades, or clean transportation.

These bonds are a simple and effective way to directly support climate solutions while also earning a return on your investment.

It’s a clear way to know that your money is helping the planet.

10. Choose an ethical fund

For many people, the easiest way to start is by investing in a professionally managed ethical fund. These funds are run by experts who do all the research for you, ensuring the investments meet specific ethical criteria.

These funds are often labelled as “ethical”, “ESG”, or “socially responsible”, which makes it easy to find one that matches your beliefs. It’s a convenient way to dip your toes into ethical investing without having to research every single company yourself.

11. Look for the B Corporation certification

A B Corporation is a business that has been independently certified to meet high standards of social and environmental performance, public transparency, and legal accountability. Think of it as a quality stamp for ethical businesses.

When you support a B Corp, you know you are putting your money into a company that is legally committed to balancing profit and purpose. It takes the guesswork out of finding a truly ethical business.

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12. Be wary of greenwashing

Just like a product might be labelled “natural” without actually being healthy, some companies might try to appear ethical without genuinely being so. This is called “greenwashing”. It’s when a company spends more time and money on marketing itself as green than on actually being green.

To avoid this, always do a little research. Look for transparent reports and third-party certifications, and don’t just rely on the company’s own claims. A healthy dose of scepticism is a good thing in investing.

13. Consider microfinance

Microfinance is a form of investing that provides small loans to entrepreneurs and small business owners in developing countries who may not have access to traditional banking services.

By investing in microfinance, you’re helping to empower individuals and communities to lift themselves out of poverty. It’s a powerful and direct way to make a difference with a relatively small amount of money.

14. Vote with your investment choices

Every time you choose to invest in an ethical company and avoid an unethical one, you’re sending a message to the market. Your choices have power. As more people and businesses favour ethical options, the entire financial system is encouraged to become more responsible.

Your investment decisions are a form of voting for the kind of world you want to live in. It shows that you believe businesses should be a force for good.

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15. Start small and grow confidently

You don’t need a lot of money to start ethical investing. Even small, regular investments can grow into a significant amount over time. The key is to start somewhere and get comfortable with the process.

There are many platforms and apps available today that make ethical investing easy and accessible for everyone. Begin with a small amount in a fund or company you believe in, and watch your money and your confidence grow together.

Conclusion

Ethical investing is not just for the wealthy or the experts; it’s for anyone who wants their money to do more than just make a profit. It’s a purposeful way to invest that aligns your financial future with your personal values. By considering these fifteen simple strategies, you can begin to navigate the world of investing with confidence and integrity. From avoiding harmful industries to actively supporting positive change, every investment choice you make has the potential to contribute to a better world. Remember, your money is a tool for good, and by choosing to invest ethically, you are helping to build a more just and sustainable future for all.

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