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Ethical investing has been going on for a few decades, but it has only been in the last 10 years that it has really gained a toehold. With the stock market more accessible to a range of "ordinary" people, companies are becoming more aware of their choices. In this way, ethical investing in business is becoming popular. Businesses want to show consumers and investors alike that they have high moral standards and that they are willing to behave in an ethical manner.
Environmental concerns, as well as the public outcry against inhumane treatment of workers in some countries have further spotlighted ethical investing and encouraged its growth. There is also a strong Christian element in ethical investing, as the moral duty to spend money as "wise stewards" is increasingly taught. As people have realized the power they have to make decisions with their wallets, ethical investing has gained great traction. -
Many people find that the benefits of ethical investing are mostly intangible. They like to feel good about the causes that their money is helping, and so they choose to invest in businesses with ethical practices.
Ethical investing in business can also have direct benefits, especially in terms of proxy voting. Proxy voting is when shareholders get to exercise their voice in matters of corporate governance. In the last five years, there has been a dramatic increase in the number of votes taken with regard to such issues as human rights, environmental concerns and social responsibility. When enough people exercise their rights, changes can be forced upon businesses.
Finally, there is a monetary benefit to ethical investing. Investing offers the chance of a return, and this means that it is possible to make money from the investments made in ethical companies. -
If enough people choose to engage in ethical investing in business, there is very real potential for substantial changes to be made. Additionally, as companies attract more people through ethical practices, there is a potential for investors to make money as their share prices improve.
The potential for very real gains is especially present in start-up companies and small companies. This is being seen in the alternative energy sector, where new technologies could take off as society looks for alternatives to fossil fuels. - There are different types of ethical investing for business, and different ways to become involved. In addition to stocks and proxy voting, listed above, there are other options for ethical investing. Microloans are small loans made to struggling entrepreneurs in third-world countries. You receive interest when the money you loan is paid back. The other option is finding mutual funds, index funds and exchange-traded funds that all focus on ethical investing. You can invest in groups of environmental companies or Christian companies. There are indexes and funds that reflect sustainable businesses.
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Realize, however, that ethical investing in business has its risks. Any investment carries with it the risk of loss, and it is vital that you research your choices beforehand. In some cases, ethical companies are more vulnerable because they have a shorter history, smaller capitalization or greater exposure to risk.
You should choose your investments carefully, consulting with a professional in some cases and realizing that no one can be held liable for your losses except yourself.
