An ethically-aligned investment strategy is the best way to ensure that you are taking care of the people and planet that will benefit from your capital for many years to come.
However, investing in ethical companies and choosing an ethical fund can be as rewarding as it is challenging. Many ethical concerns are complex, and some may not be relevant to your investment horizon.
That said, if you’re new to ethical investing or your returns aren’t meeting your expectations, then you might want to read on. Let’s explore what being ethically aligned means and how you can assess if your current investing strategy is aligned to doing what’s right for humankind.
1. Look at the Sustainability Reports
One of the first things you should do when evaluating the impact of your investments is to look at the company’s sustainability reports. Each company will likely generate a number of these reports over the course of their existence, and you can look them over to see how the company is performing on sustainability.
The reports will often have information on water use, carbon emissions, and other issues that impact the company’s impact on the world.
2. Consult an Investment Advisor
Investment advisors can be a great resource for investors who want to make sure that your investments are working for the benefit of humankind. They can help you assess the impact of your investments, and help you make sure that they remain aligned with your values. Furthermore, consult a fund advisor if you consider expanding your product line by launching an interval fund.
3. What Difference Are the Companies Making to People’s Lives
One of the most important ways to assess the impact of your investments is to look at how much value the companies are adding to the lives of people.
Unfortunately, many investors tend to overlook this.
It can be easy to fall into the trap of investing in companies that are growing, gaining revenue and making profits, but aren’t making a tangible impact on the world.
Therefore, invest only in companies making a difference. Find companies that are creating jobs, providing people with a better quality of life, and improving their quality of life.
4. Look at How Much From Revenue the Company Is Directing Towards Sustainability
Another important consideration when assessing the impact of your investments is the percentage of revenues that a company is directing towards sustainability initiatives. This will give you a clear picture of how committed a company is towards the betterment of humankind.
In addition to looking at the percentage of revenue that a company is directing towards sustainability, you should also assess the number of employees that are working on sustainability initiatives.
5. Assess the Management Activity Periodically
Investors can often get too caught up by the numbers generated by a company, especially if they’re growing, that they forget or ignore the management’s day-to-day activities.
Make sure you know what the directors are doing at all times. Are they making decisions that support the ethical activities of the company, or are they just maintaining the status quo?
It’s important to take a step back from time to time as investors can often miss important signs of an unethical company.
As the markets continue to boom, it’s easy to overlook important realities. Investors are attracted to the positive returns generated by the bull run, but they should also factor in the impact their money has on the environment and humankind.
The good news is that ethically-minded investors can measure their impact on the world and implement the right measures to make sure their money is doing what’s right for humankind.