Investments are often thought of in terms of profit and returns. Increasingly, though, people are asking how they can make investments that both benefit themselves and provide for a more sustainable and ethical society.
There are many ways for ethical investors to have a positive impact on the world. Here are nine types of businesses and industries to consider.
1. Worthy Startups
There are countless entrepreneurs and startups with high earning potential that are pursuing worthy causes. Investing in these startups is an opportunity to help new and fresh innovators make their mark on the world.
These investment opportunities are often overlooked, and smart investors should look outside their typical spheres to find the ideal candidates. Patrick Chung of Xfund, for example, develops partnerships with research universities to find promising entrepreneurs. Innovation is often happening in places people are not paying attention to.
2. Green Technology
Green technology has made huge strides in recent years, and governments, businesses, and NGOs are all focusing more on how technology can combat climate change. As these entities prioritize and fund green innovation, investors can participate in an increasingly profitable industry that is promoting sustainability and healthy environmental practices.
3. Ethical Industries
One of the easiest ways of ethical investing is to simply avoid making investments in industries that are known to cause harm. Weapons, tobacco, and oil are obvious industries to avoid, but there are many others that investors may not be aware are causing significant problems. For example, industries that benefit from human rights abuses or contribute to deforestation should be avoided, as well.
4. Environmental Stewards
Companies that put the environment first in their practices are ideal candidates for investment. There are many ways for a company to be an environmental steward. They may have green initiatives to reduce waste in their offices, or they may make contributions to environmental organizations. Others create and promote products that reduce consumers’ impact on the environment.
Consumers reward companies that strive to be environmental stewards. Businesses that focus on sustainability are often finding that their priorities are good for their bottom line, which is great for investors.
5. Innovative Missions
There are many businesses and entrepreneurs whose primary mission is to pursue innovative ways to make the world a better place. These entities are ideal candidates for ethical investors looking for ways to have an impact on the world.
6. Inclusive Organizations
Many investors focus on organizations that prioritize diversity and inclusivity both in their hiring practices and in the services and products they provide. Some of the things that investors can look at to determine a business’s level of focus on diversity are:
- Board of directors and c-suite composition
- Fair hiring practices
- Formal policies that promote diversity
- Disclosure of diversity statistics
- Inclusive products and services
In addition to being the right thing to do, these organizations tend to see enterprise-wide benefits from greater diversity. Inclusivity is both good for society and a business’s success.
7. Risk Mitigators
Risk is an inherent part of business, and innovation requires individuals and organizations to take chances that may not always pan out. However, taking unnecessary or disproportionate risks for the sake of profit can harm employees, communities, and economies. The most vulnerable stakeholders should not suffer the most from a business’s failure.
Ethical investors should look for companies that responsibility balance risk with reward and mitigate the potential for negative impacts on their stakeholders.
8. Inclusive Capitalism
Growing income inequality has led to calls for businesses, industries, and governments to focus on addressing this issue. Ethical investors are looking for organizations and initiatives that promote inclusive capitalism.
9. Infrastructure Investors
Many parts of the world lack the infrastructure necessary to provide the best opportunities for the people living there. Companies that seek to provide infrastructure in ethical and sustainable ways are helping to address the worldwide income gap and provide a better quality of life for people across the world.
Ethical investing has grown in popularity because people realize that they do not have to choose between the greater good and profits. Moral, sustainable, and diverse companies and industries are having a positive impact on the world while still growing and succeeding. People that invest in such organizations help to promote their good work and influence.