In today’s world, more investors are seeking not only financial returns but also alignment between their money and their values. This approach, known as ethical investing, is about choosing investments that consider environmental, social, and governance (ESG) factors alongside traditional financial analysis. It’s investing with purpose—striving for profit while supporting positive change.
Ethical investing can take many forms. For some, it means avoiding industries such as tobacco, weapons, or fossil fuels (known as negative screening). For others, it’s about positive screening—actively seeking out companies that demonstrate leadership in renewable energy, fair labour practices, or diversity. Many also engage in shareholder activism, using their voice as investors to influence corporate behaviour.
The goal is to create a portfolio that reflects your personal values while still pursuing financial growth. However, ethical investing is not a one-size-fits-all journey—it requires careful reflection and, often, professional guidance.
Top 5 Questions to Ask Yourself Before You Invest
Before committing your money, it’s worth reflecting on what “ethical” means to you. Here are five key questions:
- What do I value most?
Do you care deeply about environmental sustainability, human rights, animal welfare, or social justice? Identifying your priorities will help narrow your focus. - What industries or activities do I want to avoid?
Some people exclude gambling, alcohol, or mining, while others are comfortable with certain industries if companies are making efforts to transition or improve. - Am I willing to balance returns with ethics?
Ethical funds often perform competitively, but there may be trade-offs in diversification or short-term gains. Consider how flexible you are. - Do I want to make a positive impact or simply avoid harm?
There’s a difference between excluding harmful industries and proactively investing in companies driving positive change. Which resonates more with you? - How much research am I prepared to do myself?
Some investors enjoy hands-on research into ESG ratings and company practices, while others prefer to rely on professional advice or managed funds.
5 Questions to Ask Your Financial Adviser
Once you’ve reflected on your values, the next step is to seek professional advice. A financial adviser can help you navigate the complexities of ethical investing, but it’s important to ask the right questions:
- What ethical investment options do you recommend, and how do they align with my values?
Ensure their suggestions match your personal priorities rather than a generic “ethical” label. - How are companies or funds screened for ethical performance?
Ask whether they use third-party ESG ratings, their own research, or a mix of both. Transparency in the screening process is crucial. - What are the potential financial trade-offs of choosing ethical investments?
Understanding both risks and opportunities helps you make informed decisions. - Can you provide examples of how these investments have performed over time?Reviewing historical performance will give you a clearer picture of long-term outcomes.
- How can I ensure my portfolio remains aligned with my values as industries evolve? Markets and ethics aren’t static. Your adviser should explain how they monitor and adjust strategies over time.
Why Seeking Advice Matters
Ethical investing is deeply personal, but it’s also complex. The world of ESG ratings, industry standards, and shifting regulations can be overwhelming to navigate alone. A qualified financial adviser can help you translate your values into a practical strategy, balance ethical considerations with financial goals, and avoid greenwashing pitfalls.
By asking thoughtful questions—both of yourself and your adviser—you can build a portfolio that delivers not only returns but also peace of mind, knowing your money is working toward a future you believe in.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.