Gone are the days when investing was only about returns. Today’s investors increasingly want to align their money with their values, giving rise to ethical or “impact” investing.
But how do you balance profit and purpose?
What is ethical investing?
It’s a strategy that considers not only financial returns but also a company’s impact on people and the planet. Investors screen businesses based on Environmental, Social, and Governance (ESG) criteria.
Common themes include:
- Renewable energy and sustainability
- Gender and racial equity
- Clean tech and green infrastructure
- Corporate transparency and governance
- Human rights and labor practices
Approaches to ethical investing:
- Negative screening: Avoiding industries like tobacco, weapons, fossil fuels, or fast fashion.
- Positive screening: Choosing companies that actively do good—like solar companies or B Corps.
- Shareholder activism: Buying shares and influencing company policies through voting and engagement.
- Thematic investing: Focusing on one area (e.g., clean water or green real estate) through ETFs or mutual funds.
Do ethical investments perform well?
Yes—many ESG-focused funds have matched or outperformed traditional indices in recent years. Long-term, companies that manage risk responsibly tend to be more resilient.
Tools to get started:
Platforms like Ethic, Betterment, or ETFs like iShares ESG Aware offer accessible entry points.
Ethical investing isn’t about charity—it’s about creating a world worth retiring into. You can grow wealth and make an impact—and that’s powerful.
