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The Issues

Does Ethical Investing Really Exist?

Billie Simmons
Money has power. It has the power to change your personal circumstances, to unleash both your potential and other’s, and to drive real change in the world. What we do with our money matters; boycotting businesses as a way of driving social change has long been a tactic of discriminated-against groups.

Recently, the inverse of this strategy has become more popular; supporting businesses and organizations that are run by or work for the communities you belong to is a great way to keep those businesses thriving, which has the roundabout effect of encouraging other members of that community to start their own businesses and thrive.

Divesting vs Investing

These tactics also exist in investing. Divesting caused Peabody, the world’s biggest coal company, to go bankrupt in 2016. On the other side, there’s ethical investing (or social impact investing, ESG investing, whatever you want to call it).

But how do you decide if a company is worth divesting or investing in? Well, there are a lot of approaches.

The easiest is to invest in existing ethical funds. ‘ESG’ funds like the Vanguard FTSE Social Index Fund which “track a benchmark of large- and mid-capitalization stocks that have been screened for certain social, human rights, and environmental criteria” allows you to easily manage your money in a way that outsources the work of assessing companies.

Assessing a Company

But what if that isn’t enough for you? Well, then it’s time to start doing some research! Make a list of the things that matter to you when supporting a company or business. Examples might include:

  • Business goals/outcomes – is the company trying to do something good in the world?
  • Inclusive practices – does the company have internal and external policies around inclusivity? Is the entire C-suite straight white men?
  • Partnerships – What other companies do they partner with and what are their ethics like? Would those companies also pass this assessment? (Might also be a good way to find other companies that you can invest in too!)
  • Social good – do they do anything to support causes that matter to you? Do they just change their logo to a rainbow during pride month, or do they actually support causes with time, money, support year-round?

Beyond Stocks

Beyond the stock market, there are also ways to get a return on investment in more innovative ways. Organizations like The Zebra Collective and other collective venture capital or angel groups like Gaingels offer ways to be more specific with your investments, and to invest in founders and ideas that excite you.

Ultimately, it’s about what matters to you and where you want to put your money. Everyone has different principles around what is important to support, and as long as you feel you’re doing good in the world with your money, that’s all that matters!