Many of us are used to making ethical purchases – as consumers, we tend to know what to look for in the products we buy to ensure they don’t cause harm to people or the planet. But when it comes to investing, ensuring that you only put your money into ethical products and companies can feel a lot trickier, particularly if you’re new to the complex world of stocks, bonds and shares.
To help you grow your wealth whilst also staying true to your values, here are three steps that you can follow, as a consumer, to make ethical investments.
Define what ethical investing means to you
Perhaps you’re on the lookout for green, sustainable investment opportunities, or ones that are socially and economically responsible. You could be looking to invest in a particular asset that has been ethically sourced or mined, or, you may simply want to make sure that you’re only funding companies that donate a portion of their profits to social or environmental causes.
You’ll need to do plenty of research to ensure that any opportunity you choose meets your ethical requirements and expectations. There are certain sustainability labels you can look for – you can also check investment factsheets and third-party analysis, or seek the help of a financial advisor.
Find opportunities that match your goals
Investing in ethical products and companies may be important to you, but you’ll need to make sure that any investment you make is one that’s financially worthwhile, too.
With this in mind, it’s vital to consider your financial goals. Are you willing to invest in a high-stakes opportunity to see a swift potential return on your investment, or are you looking for a low-risk investment that offers steady, reliable results in the long term? If the former, you might want to look at stocks and shares – if the latter, consider bonds, index funds, or a safe haven physical asset, such as gold.
There are many different kinds of investment, and each will come with its own benefits and risks. Your financial aims and motivation for investing will help you to determine the best method for reaching your goals without compromising on your values.
Stay in the know
Even after you’ve identified your ethical investments, it’s important to stay in the know. While a company may have been following certain ethical procedures and practices when you made your initial investment, their credentials could change over time. So, it’s important to know what to look for, and continue to stay up to date with the newest ethical practices and regulations to ensure you’re not funding greenwashing schemes or harmful corporate activities with your investments.