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Socially responsible investing: Top ethical investments tips and advice

Ethical investments or socially responsible investments (SRI) are 'green', socially conscious investments that consider both the social good and financial return of the investment. Ethical investors encourage corporate practices that promote community investing, environmental stewardship, human rights, consumer protection, diversity and shareholder advocacy. In a world faced with many challenges like environmental degradation, poverty and disease, you will want to practice ‘ethical’ and ‘sustainable’ investing to make sure your money works not only for your good, but also for the good of the planet.

Ethical and sustainable investing

There are many different ways individuals and businesses engage in ethical and sustainable investing. Many socially conscious businesses actively avoid putting their money in industries involved in gambling, pornography, animal testing, nuclear energy, arms, tobacco and alcohol. Others actively put their money in worthy causes like reforestation to promote the restoration and protection of the environment and girl child education in developing countries to promote more gender balance in society.

In order to ensure ethical investments work for both you and the planet, you need to be clear about your investment strategy. For example, are you against animal testing for medical reasons or just for cosmetics purposes? What about arms? Are you against investing in development of nuclear weapons for war or for defence? Answering such questions beforehand can help you choose a sustainable and ethical investment option that matches your particular profile.

Tips for socially responsible investing

Conventional advice on investing assumes that you have no reservations in putting your money in the hands of large businesses and corporations. However, socially conscious individuals and businesses may actually have many concerns about investing in corporations involved in certain industries like gambling and pornography no matter how big and profitable the corporations are.

If you are uneasy about putting your money in commonly criticised companies, there are some basic ethical investments tips and advice you can apply to ensure you make socially responsible investments of your funds in a way that benefits both you and the planet Earth.

1. Assign priority to your causes

People are passionate about specific causes that have direct relevance in their lives. For example, you may have loved ones who suffer or suffered a chronic disease like cancer or HIV/AIDS. Dealing with or treating cancer or HIV/AIDS may, therefore, be a cause that resonates personally with you. In this case, you can put your money in companies that assure the best chance of therapeutic advancements. Likewise, if your priority cause is education, community banking, local farming or even the planet Earth itself, select 'green', ethical investments that directly apply to your priority cause(s).

2. Research your options

Just like any other investment undertaking, ethical investments require that you research your investment options thoroughly. Browse through research websites that provide listings of mutual funds, performance data and charts to help inform your ethical investment choice. For a start, read the resource guides provided at Social Investment Forum at ussif.org and hudsongreen.co.uk.

You might also want to check out fund managers like kamescapital.com and impax.co.uk that boast strong teams that look into socially responsible investing opportunities as well as consult established Independent Financial Advisers (IFAs) like Barchester Green Investment found at barchestergreen.co.uk.

3. Elaborate your bottom line

Like any other investor, you need to elaborate your ethical investments goals together with impact. For example, are you willing to take some risk or accept a lower rate of return on investment in exchange for doing good? Do you want to see tangible benefits from putting your investments in a portfolio of socially responsible companies or do you trust that your investment in a single ethical company will have the most impact?

Elaborate your investment plan and define your goals to identify the most viable socially responsible investing options available to you. Keep in mind throughout the triple bottom line of ethical investments: people, planet and profits.

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