Ethical investing is often referred to as socially responsible investing. This form of investing involves trying to maximize the return on investment while simultaneously maximizing the social good of an investment. They seek to invest in companies that emphasize the definition of corporate responsibility. Socially responsible investors look to invest in assets that do not go against their own moral beliefs and standards. Here are a few of the areas that socially responsible investors seek to avoid.
You won’t find companies like the Las Vegas Sands or Penn National Gaming in the portfolios of socially responsible investors. They seek to avoid companies that make their money by enticing individuals into gambling away their hard earned savings. Many of the customers of gambling institutions lost money that they could ill afford to lose. This could be mortgage payments, auto loans, retirement expenses, and bill money that is lost at the casino tables. Ethical investors do not wish to profit from such endeavors.
Smoking is a very serious and expensive habit to have. It can result in sickness and cancer after prolonged use. Ethical investing does not support the efforts of companies that plant, harvest, and produce tobacco. Companies like Phillip Morris and Altria are prime offenders to the ethical investors. They may offer very high yields but they are not enough to pry away the dollars of the socially responsible.
Alcohol can be an incredibly addictive substance and has ruined the lives of many people. Individuals that are involved in socially responsible efforts bypass the profits of the big alcohol producers due to the harmful effects of their products. Companies like Budweiser and Fortune Brands make a variety of liquors that people may enjoy partaking of but they are not appropriate investment opportunities for the socially responsible.
War is another no-no to the socially responsible investor. They do not want to invest in companies that provide the weaponry for either side during these conflicts. That is because weapons often injure people and result in the loss of life. An ethical investor would not buy shares of Smith & Wesson or any of the defense contractors that provide military weaponry.
Companies like BP are enemy number 1 of socially responsible people. The recent oil spill has put them in hot water with environmentalists and investors that care about the effect of oil production on the earth. Many of the major integrated oil companies would not be suitable investments for anyone looking to adhere to the tenets of socially responsible investing.
Low wage payers
Socially responsible investors only want to place their dollars in companies that have integrity. They want to invest in companies that enhance communities and improve the lives of their workers. Companies that violate child labor laws in foreign countries and pay oppressive wages do not fit the bill. It may require researching the operations of multinational corporations overseas to see if they are perennial offenders.
These are a few of the factors that should be considered when looking for ethical investments. Companies that are good stewards of their resources both human and financial are good places to start.
So, where do you put your money? Are you being ethically responsible with your investments?
This topic is a hard one for us. So many companies do so much damage but pump $ millions into programs that make them appear ethical to the public while dirty habits are conveniently forgotten.
@ SPF. Me too. It is so hard to find the information you need about a company in order to decide whether to invest in them. I wish there was just more honesty period. I hate tying to dicifer the truth from the lies.
I feel like it would almost be impossible to partake in mutual fund investing if you are going to try and follow this technique/way of life.
Additionally, you probably will have to cut out all financials since they fund all those companies you have no interest in.
@ My Journey to Millions. You raise a valid point. It is a real challenge. I am not giving up the search though. Eventually, more options like this will be available.
It is all depends what you call a war…so many companies supply either parts to manufacture weapons,
food, fuel, etc…where would you stop?
Low wage payer – no go to China and Asia than?
My personal opinion this a step to far, that is why China is advancing. They simply putting business needs first.
@Financial Independence. For me knowing what products I am helping support is huge. If a company is making weapons, food, etc for war then I wouldn’t invest in it. I guess just knowing your values is what guides these types of decisions.
Corporate Sustainability involves taking care of the society and environment along with the financial aspects. If you are killing the nature and exploiting the people around you and perhaps making a profit, it will die out sooner rather than later. So this blog is very relevant in today’s world. Thanks for initiating it!