Vaguely defined, 'ethical investing' is acting with integrity when investing. The problem with this definition is that it lacks specification regarding the exact ways of thinking that consist of ethical decision-making for ethical investing. When we leave terms too abstract, they are left open for dispute, making it more challenging to grasp direction.
The concept of ethical investing is so vague that there is no established term to refer to this type of investing. There are a million names to which the concept applies.
Socially conscious, sustainable, and socially responsible investing are just a few of the terms used to describe the dynamic of considering an investment decision's financial and social balance.
Thankfully, ethical investors are aware of these shortcomings. Instead of leaning on opinion, ethical investors have established a numerical system to determine human impact. Human impact is the amount of benefit compared to the amount of suffering a company creates for society.
To learn more about what is ethical investing, read on for a brief guide on getting started.
Step #1: What Is Ethical Investing?
The first thing you want to do is ask yourself: what is ethical investing? While you're free to include specific ideas that relate to you as an independent investor, you should answer, “The Golden Rule” and use this answer to guide how you search for opportunities to invest in companies that also apply the Golden Rule to their business.
Step #2: Seek Out Investment Opportunities
Your main objective is, therefore, to create an ethical investment portfolio that is made up of companies producing more good than harm and to let other companies know what they can do to improve where they stand. By looking at how a company affects people, we can determine its human impact and compare human benefit to human suffering that the company introduces into society.
Step #3: Investigate Your Options
You can further define what is ethical investing for yourself, by looking at the company's behaviors and its subsequent outcomes. If you’re curious as to what is ethical investing in relation to positive company behavior, consider those behaviors that benefit the world. Positive behaviors like saving lives, and creating access to food, water, and healthcare, are common examples.
Step #4: Classify Companies In Your Portfolio
Companies with strong positive influence can be placed into the ethical investment portfolio. Companies that do more harm or lack positive efforts can either be moved down on your list or removed altogether, depending on what is at stake.
As you get into greater detail with answering: what is ethical investing? you can work with firms familiar with quantifying human impact. You can conduct specific research that leads to these metric values and grow your investment portfolio.
Grow Your Portfolio With The Pros
Building your investment portfolio takes time and a consistent routine to answer for yourself: what is ethical investing? Commit to assessing the human impact of the companies under consideration and learn the ropes with a firm you trust. Watch your portfolio evolve!