Ethical investments in the UK continue to outperform traditional types of investments as the world becomes more aware of environmental issues, the value of human life, and the importance of social justice. One advantage of this type of investment is that investors are given a chance to grow their assets without compromising their moral values, religious beliefs, or principles. They can gain financial freedom and make a difference for the world at the same time.
Choosing ethical investments in the UK used to be simple and straightforward; you just had to avoid companies or industries that are known for their negative environmental impacts, such as tobacco and oil companies. But the increasing awareness of various social and ecological issues has made the process complicated. Nowadays, there are a lot of standards and various approaches to consider when screening companies.
Here are some of the popular strategies that investors use when selecting ethical investments in the UK to include in their portfolios:
- Focus on companies that have positive impacts
It’s not enough to exclude companies involved in industries like fossil fuels—you also have to seek companies that actively and measurably strive to have a positive social or environmental impact. Examples are manufacturers that use renewable or alternative energy, those that promote animal welfare, and those that engage in fair trade practices.
- Choose community-based organisations
This is similar to the approach above, but it focuses on community-based organisations in low-income areas. Through community investments, small businesses and people get to borrow loans for their operations. In some cases, they can also use to fund housing, education, and sustainable projects.
- File shareholder resolutions
This strategy enables investors to use their influence to drive changes in the companies where they are stockholders. They can file shareholder resolutions to propose policy changes to make the organisation more socially responsible.
