Investment priorities are changing. With growing concern over climate change, worker’s rights, and greater sustainability, the need for alternative environmental and socially conscious investment opportunities are greater than ever. Once seen as a niche investment strategy ethical investing has become much more acceptable to investors in recent years. Central to any investment is a profitable return. However, investors are looking more and more at renewable energy, social responsibility, environmental impact, and sustainability when considering their investment opportunities. They are becoming more concerned that traditional investments could be affected by future government policy in tackling climate change, the finite supply of fossil fuel, society’s changing attitudes to environmental protection and social responsibility in the long term.
The last financial crisis, climate change, and other issues have caused investors to think carefully when choosing investment funds. Many investors are now looking at companies that can demonstrate strong environmental and social responsibility practices, particularly in light of changing attitudes and high-profile environmental catastrophes. This along with the need for alternative investment options has helped to increase the focus on responsible investing.
What are Ethical Investments?
Ethical investing is any investment strategy in which you apply your values— social, moral, religious — to your portfolios and investment strategies. It comes in many different investment forms, some more stringent than others. The common theme is a set of ethical principles which are about more than simply making money. For example, many ethical investment funds refuse to invest in arms, tobacco, or oil and avoid companies who don’t meet the UN Global Compact criteria – https://www.unglobalcompact.org/ and can include environmental social and governance investing, sustainable, impact, values-based, conscious, and green investing. Socially responsible investing or ethical investing is any investment strategy that considers both the financial return and the social good to bring about a social change.
Investing in Ethical Stocks, what to do next?
Before looking for a suitable fund, you should consider what type of companies you would like to invest in and which you don’t. If you’re not sure your financial adviser will be able to advise you. Under new EU regulations, Investment funds and financial advisers are required to disclose product information related to sustainability for both environmental, social, and governance (ESG)-related products and non-ESG (Environmental, Social & Governance) products. The regulation requires entities to classify the products or advice they offer into one of the three categories:- mainstream products, products promoting environmental or social characteristics, or products with sustainable investment objectives. Make sure you do your research in advance.
Consider what is important to you when looking at investment opportunities?
- What are your reasons for investing in the first place?
- What’s your risk tolerance?
- Why are you investing in ethical stock? By excluding investments that don’t meet your ethical criteria you are excluding some higher-performing stocks. You invest to make money so be careful and do your homework
- As with all investments make sure you have a long-term plan and stick to it.
For more information about Ethical Investments or Investments, in general, click here to request a call.
Warning: Past performance is not a reliable guide to future performance. The value of your investments, as well as any income generated from such investments, may go down as well as up. You may not get back all of your original investment. Returns on investments may increase or decrease as a result of currency fluctuations.
This article is for information only and is not financial advice. You should always obtain your own independent advice based on your own particular circumstances, before entering into any financial contract.