What if your money could do more than just grow? What if it could also make the world a better place? Ethical investing—sometimes called socially responsible investing (SRI) or impact investing—offers a way to do exactly that. It’s about building wealth while supporting companies and causes that align with your values, whether that’s protecting the environment, promoting social justice, or ensuring ethical business practices.
At Cash and Values, we’re all about combining financial success with purpose. Ethical investing is a natural fit for this mission, letting you pursue profit without compromising your principles. In this blog, we’ll dive into what ethical investing is, why it’s worth considering, and how you can get started—complete with real tips and examples to guide you.
What is Ethical Investing?
Ethical investing means putting your money into investments that deliver both financial returns and positive impact. It’s different from traditional investing, where the only goal is profit. Instead, ethical investing looks at the bigger picture. Here’s how it breaks down:
- ESG Criteria: This stands for Environmental, Social, and Governance. It’s a framework to evaluate companies based on their sustainability efforts, treatment of employees and communities, and leadership transparency.
- Impact Investing: This involves funding projects or businesses that aim to solve specific problems—like clean energy startups or affordable housing initiatives—while still earning a return.
- Negative Screening: Avoiding industries that clash with your values, such as fossil fuels, tobacco, or weapons manufacturing.
- Positive Screening: Seeking out companies that lead the way in areas like renewable energy, diversity, or ethical supply chains.
The Global Impact Investing Network reports that over $1 trillion in assets are now managed with impact in mind globally as of 2023. That’s a clear sign ethical investing is no longer a niche—it’s a movement.
Why Choose Ethical Investing?
So, why are more people jumping on the ethical investing bandwagon? Here are some compelling reasons:
- Values Meet Wealth: Your investments can reflect what you stand for. Passionate about climate action? You can back companies reducing carbon emissions. Care about fairness? You can support businesses with equitable practices.
- Stronger Long-Term Returns: Ethical companies often thrive over time. A Morningstar study showed that sustainable funds held up better during market dips, hinting at their resilience.
- Rising Demand: People want businesses to act responsibly. Companies that prioritize ethics are gaining customers and investors, which can boost their growth—and your returns.
- Feel-Good Factor: There’s something satisfying about knowing your money is doing good. It’s wealth with a purpose.
As Proverbs 13:11 puts it, “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” Ethical investing takes that slow-and-steady approach, blending financial wisdom with integrity.
How to Start Ethical Investing
Ready to give it a try? You don’t need to be a Wall Street pro to start. Here’s a simple roadmap:
- Know Your Values: What matters most to you? Clean energy? Workers’ rights? Ethical leadership? Pinpointing your priorities will shape your choices.
- Explore Ethical Funds: Look into mutual funds or ETFs focused on ESG or impact goals. The Parnassus Core Equity Fund, for instance, balances strong returns with a solid ethical track record.
- Try Robo-Advisors: Platforms like Betterment or Wealthsimple offer pre-built socially responsible portfolios—perfect for beginners.
- Check Ratings: Use tools like Morningstar’s Sustainability Ratings or MSCI ESG Ratings to see how companies stack up on ethics.
- Dip Your Toes In: Start with a small portion of your portfolio. Test the waters, then scale up as you gain confidence.
Quick Tip: Don’t buy the myth that ethical investing means low returns. The MSCI KLD 400 Social Index, which tracks ethical companies, has kept pace with broader markets for years.
Challenges (and Solutions)
Ethical investing isn’t perfect, but the hurdles are manageable:
- Greenwashing: Some companies talk a big game but don’t deliver. Check certifications from groups like B Lab or Global Reporting Initiative (GRI) to spot the real deal.
- Fewer Choices: Your specific values might limit options. The good news? The ethical investing space is expanding fast.
- Profit vs. Purpose: Balancing both can feel tricky. A financial advisor with ethical investing expertise can help you find the sweet spot.
At Cash and Values, we’re here to help you navigate these challenges with resources and insights tailored to your goals.
Real-World Example
Meet Sarah, an entrepreneur who wanted her investments to match her love for the planet. She put money into a renewable energy ETF funding solar and wind projects. Five years later, her portfolio grew by 8% annually—and she helped power the shift to clean energy. For Sarah, it was the best of both worlds: profit and purpose.
Her story proves ethical investing can deliver real results, financially and beyond.
Conclusion
Ethical investing lets you grow your wealth while shaping a future you believe in. It’s a practical, powerful way to live out the mission of Cash and Values: blending financial success with purpose-driven values. Whether you’re an entrepreneur, investor, or leader, your money can be a force for good—starting today.
Want to take the next step? Check out our Programs for tools and strategies to build a portfolio that’s as meaningful as it is profitable. Your investments can change the world—why not start now?
