19 Mar 6 Ways to Ethically Invest in 2020
Guest blog written by Ruby Clarkson.
2020 is set to be the year where the world really starts thinking about the impact our actions have on the planet. Ethical practices are becoming increasingly important for consumers, and this extends to the ways that we are investing our money.
According to finance experts, The Fry Group, “the trend for socially responsible investing will continue to grow in both pace and importance. Consequently, companies will have to incorporate a responsibility in what they do and how they do it…considering the environmental impact of their actions, products and services, and their ethical position on a range of topics linked to their sector and beyond.”
This is a clear indication of the importance that’s now being placed on ethical investing.
If you have money to invest, it can sometimes be challenging to know how to invest ethically, so here are six ideas:
1 - Invest in companies who are doing good
Whether they are developing eco-friendly trains, plant-based food, green energy, or designing reusable nappies. If you are going to invest in a company, pick one that is doing good. This could be due to the nature of its business, or it could be the way they operate – the sourcing of their raw materials, or how they treat their staff, for example.
If you are thinking of investing in one or a small number of companies, do your research first. If they place high importance on being an ethical business, they will definitely be telling you about it!
2 - Co-Operatives
Co-operatives, or community-owned and run businesses, are usually democratic and fair. They are typically owned by several smaller stake-holders, and are becoming increasingly popular as a UK business model.
The International Co-operative Alliance states that co-operatives are “based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity.” These ethical values are at the heart of the business and all its decisions. Since they are usually collectively owned by communities of people, co-operatives often put an emphasis on local projects and issues.
You can either invest your money directly into a particular co-operative or in a co-operative who'll invest your money for you.
3 - Small, Local Businesses
Instead of investing your money in massive, international businesses, try investing your money in smaller, local ones. Many small companies concern themselves with supporting local communities, treating their staff well, and doing what they can to improve the local environment.
By investing in a smaller, local business, you are not only supporting the local economy, but you are also directly impacting local people’s lives.
4 - Green Bonds
Green bonds are the same as standard bonds, except that the money you invest is put towards environmentally positive projects. The proceeds of the green bonds are 'earmarked' for these projects, but businesses must afterward prove that they have been used following the rules.
Green bonds are a relatively new kind of bond which is becoming increasingly popular. Its main benefits are that you can earn a tax-exempt income, while also knowing that you are investing your money in a worthwhile cause.
5 - Ethical Banking
If you have extra money to invest you could consider putting it into a savings account with an ethical bank. There is a growing number of banks that invest money for their customers in an ethical way.
Ethical banks usually concentrate on having a positive impact on the world – either in terms of the environment, the local community, a wider community, or all three. Ethical banks avoid investing money in commodities like fur, weapons, tobacco, or other ethically dubious businesses.
If you are considering using an ethical bank, you should do your research to ensure that their ideals match your own. Banks that consider themselves to be ‘ethical’ will always offer you information about how and where they’ll invest your money.
With more and more people wanting to ethically invest, we’ll see more opportunities emerging, becoming more available for the public.
6 - Equity Crowdfunding
Equity crowdfunding is becoming an increasingly popular investment option. It involves putting as much or little money into a ‘crowdfunding campaign’ usually set up to help start-ups. In exchange for your money you would get shares, from which you would profit if the company does well.
This way, you can look to put your money in small businesses and start-ups which match your ethical values and support the ones which you believe have a good cause.
With more and more people wanting to invest their money ethically we will see an increasing number of ethical investment opportunities emerging.
Ruby Clarkson is a freelance writer who is passionate about our planet and the animals that we share it with. When she is not writing, she is either out in the garden or wrapped up in a blanket with a good book. Accompanied by a bar of chocolate of course.