Ethical investing is one of the big financial talking points for modern times. But what exactly does it mean? Ethical investing is about placing the same importance on moral issues as financial returns. It means turning away from companies and investments that are actively damaging the environment and contributing to climate change.

Ethical investing means feeling good about your investment. It means choosing passive income streams that allow you to live better while making a positive change in the world.

In this article we will look at everything you need to know about making an ethical investment. We will also go over some interesting ethical investment ideas that you might not have thought about.

What Is Ethical Investing?

invest responsibly trading concept

Image Source: Shutterstock/iQoncept

Ethical investing will mean different things to different people. This is only natural, as morals and ethics vary from person to person. As an example, most people would consider an investment in an organic dairy farm to be an ethical investment. Vegans, however, would consider this investment to be against their ethical code.

Even taking these differences into account, there are a few categories that everyone can agree are ethical investments.

Ethical Environmental Investments

water trees save the environment

Image Source: Shutterstock/Chinnapong

Making an investment that benefits the environment can only be a good thing. By now, hopefully everyone knows the many reasons why fighting against climate change is important. Rainforests, coral reefs, and endangered species are all at risk if climate change can’t be avoided.

There is a human aspect to consider too. Rising water levels could displace millions of people who live in low-lying areas. Other areas are suffering from too little water.

Even today, droughts and a lack of access to clean water impact a shocking 2 out of every 3 people worldwide. Climate change could potentially make these areas even drier. Air pollution is leading to respiratory problems throughout the world. Nobody is immune to the effects of this, but young children are being especially affected.

Making an environmental investment such as supporting green, clean energy, or recycling companies is a way to use your money to help the environment. Here at Truffle Farms Europe, we are actively reforesting parts of Europe. This is the type of forward-thinking investment that future generations will thank you for.

Socially Responsible Investing

solar panels with sun rising in background

Image Source: Shutterstock/Terelyuk

The main priority for folks making a Socially Responsible Investing (SRI) is to avoid investing in companies that profit from worsening the human or global condition.

Again, personal moral values will come into play, but there are some examples most people agree with. Investing in companies that force employees into long hours with low wages is not compatible with SRI. Neither is investing in companies that profit from wars.

Socially Responsible Investing means tailoring your portfolio to suit your beliefs. If you don’t want to invest in companies that profit from alcohol or tobacco, you can avoid them.

Sustainable investing and moral investing both fall into the category for SRI. Sustainable Investing, or Green Investing, could mean investing in forestry, where investors make money from trees being planted. It could also involve investing in companies that employ responsible waste management. Investing in solar power or alternative energy sources is also a sustainable investment.

Moral investment is a term used for stock market investments. Speak with your stockbroker and let them know the type of investments that you have in mind. They will be happy to provide you with a list of companies that fulfil this criterion.

Why Is Ethical Investing Important?

people coming together societal

Image Source: Shutterstock/Rawpixel.com

The importance of ethical investing can be seen both on a personal level and on a societal level.

On a personal level, people want to feel good about themselves. Making money out of companies that exploit others, or destroy the planet, is not going to give you that good feeling. Ignorance is bliss for some, but once you’re aware of where the money is coming from, it’s difficult to keep turning a blind eye.

On a societal level ethical investing has the potential to improve the lives of countless people alive today and future generations. With faith in politicians waning, it’s becoming clear that we must come together as a society to make the positive changes we need.

How Popular Is Ethical Investing?

coins stacked against financial district backdrop

Image Source: Shutterstock/Number1411

Sadly, greed still dominates when it comes to hedge funds and institutional investors.

A recent article from Rankred estimated more than $1.3 quadrillion is tied up in investments. In case you were wondering, a quadrillion has 15 zeros. This is a staggering amount of money, and only a fraction of it is tied up in ethical investments. The forestry industry makes sales of around $200 billion per year. Renewable energy investments total around $300 billion per year.

The numbers above, highlight just how greedy our society has become.

However, public sentiment is changing, and ethical investing is gaining popularity. The fallout from the 2008 crash, and the rise in awareness about social and climate issues has helped.

What Are Some Examples Of Ethical Investing?

forest trees during the spring time

Image Source: Shutterstock/Robert Avgustin

Forestry is the most popular type of ethical investment. This is an established asset class that offers steady and secure long-term returns. Planting new forests is vital for the health of the planet. With deforestation becoming a global emergency, continued forestry investments have never been more urgently needed.

Sustainable tourism is another ethical investment to consider. Sustainable tourism aims to create jobs, preserve cultural heritage, and protect the countryside and animals. This sector has been backed by the UN Environment program.

Our Favourite Ethical Investment

truffle producing tree

Image Source: Shutterstock/jessicahyde

Naturally, our favourite type of ethical investment is in truffle producing trees.

Truffle trees used to cover large parts of Europe, before they were lost during the two World Wars. Reintroducing these trees is bringing the countryside back to life.

Truffle producing trees bring all the benefits of a traditional forestry investment and more. They help reduce our carbon footprint, and they are tax free. Truffle producing trees have some extra advantages as well. Investors start getting returns after 2-3 years, rather than 20-25 from a forestry investment. These returns are also higher than timber forestry returns. This is thanks to the high value and exceptional demand for top quality European black truffles.

How Can I Make An Ethical Investment?

coins growing green shoots

Image Source: Shutterstock/Romolo Tavani

As with any investment, the most important thing is to do your own research. Firstly, you will need to make sure the company is as ethical as it seems. A company that is hacking down rainforests to plant palm trees for oil, is not an ethical investment. It might be planting trees, but it is doing more harm than good. The company’s values should be a good fit with your own.

You also need to make sure you’re making a sound investment financially. There are plenty of scammers out there, and some of them are pushing the ethical investment angle. The rule of thumb is always, if it seems too good to be true, it is. Look for steady returns from an accredited company.

 

REQUEST MEMBERSHIP PACK

SUBSCRIBE TO BE THE FIRST TO FIND OUT ABOUT EXCLUSIVE OFFERS ON OUR TRUFFLE TREES.

You have Successfully Subscribed!