Ethical investment, also known as socially responsible investing (SRI); is a term that refers to an investment process that combines social and environmental factors when deciding upon investments that will achieve a competitive return. Essentially the company is seeking a financial return as well as making sure the investment is good for society.
With ethical investing, socially responsible investors are “encouraged” to promote consumer protection, human rights and environmentally sound products or services. For instance, businesses may steer clear of investing in alcohol, weapons, adult entertainment, gambling and even cigarettes. The level of concern for the general population outweighs the financial gain of promoting such products. In the long run, the company is supported by consumers that also refuse to invest their hard earned dollars into such products.
Ethical investment is not a new concept as there are documented cases as early as 1758 when Quakers were prohibited from partaking in slave trade. Since treat thy neighbor as you want to be treated was a big perception among the Quakers, it was also understood that no business practice should cause harm to their neighbors.
Over time, ethical investing trickled into the government during a political climate when women’s rights, civil rights and labor issues were at the forefront of people’s minds. A more recent example of ethical investing came on the heels of one of the largest oil spills in American history in 2010 at the hands of BP. Since the tragedy investments have been made to clean up the mess and get people back to work. The government stepped in to ensure BP would handle their responsibilities.
Since then, companies have looked to investing in organizations that help sustain the environment, investing in companies that provide eco-friendly positions. “Green” businesses seem to be fairing well in the current economy though their objectives have been slow to start because of lack of information made available to the public. Until recently, no one could even agree upon global warming and the effects of solar power on our environment.
Ethical investing is a great opportunity for anyone to research and weigh their options when it comes to investing their hard earned money; where it goes could potentially help society as a whole while creating a return for you.