Ethical Investment Management: How To Determine Your Portfolio’s Social Impact

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Ethical investment has become a popular aspect in recent times. This is a strategy where an investor chooses investments based on ethical codes. Generally, ethical investment seeks to support industries working towards making a positive impact on society. Some of these industries include suitable energy that aims to generate investment returns.

Thanks to the significant increase in ESG funds, more people are considering ethical investment management. The strategy is being applied in a wide range of sectors and industries. The interpretation of “ethical” depends on a person’s view and how they want to operate. For that reason, it is vital to evaluate ethical investments and ensure they align with your goals. They should also align with the impact you intend to make.

Understanding Ethical Investment Management

Some people find it challenging to apply ethical investment management because they don’t understand it. If you want to use this system in your portfolio, you need to first define your ethical values. For instance, you can list the things you care about. Generally, people believe that it is helpful to interact well with others and not contribute to activities that destroy our planet. This is a common virtue that should be expected from everyone. The integrity of that principle is the moral concept that transcends religious and cultural values.

This virtue is commonly referred to as the Golden Rule. The rule states that you should treat others the way you want to be treated. You should also be kind to others and not hurt them. The Golden Rule is applied in day-to-day life in many ways. For instance, when people disagree on various aspects, they are likely not to disagree about the Golden Rule — they disagree on how the rule is being applied. This needs you to have ethical investment management that helps you reach a common understanding.

The Quantitative Approach to Ethical Investment

There is a need for a quantitative approach that helps measure human benefit and human suffering. You can make critical observations that help you focus on creating an ideal investment portfolio through it. The portfolio should reflect the differences in various activities and their impact on people. Through ethical investment management, you will clearly understand this virtue. Besides, the ethical code recommends that companies doing good deeds should be favored and encouraged.

On the contrary, companies doing the opposite should be discouraged. By assessing and quantifying a company’s impact on people, ethical investors can contribute less human suffering. They only invest in companies that contribute to human welfare and life. They also encourage these companies to expand their operations. All this is achieved through ethical investment management.

Finding ethical investments is vital to social development. Once you have acquired a brokerage account and identified your priorities, you can start developing a portfolio that aligns with your ethics.

Help Change the World Through Ethical Investment

Ethical investment is vital for a better world. When you invest in companies that support better human experience and welfare, you play a role in developing a better world. You also help such good companies thrive.

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