An exchange traded fund with an ethical investment objective is known as an ethical ETF. For instance, if the ETF is primarily interested in ethical stocks, it might seek to invest more in businesses that are making an effort to uphold social responsibility.
Their goal is to focus on companies that keep people from being harmed environmentally or personally.
The Meaning of a Moral ETF
An ethical ETF is also called a moral ETF. So, what exactly does “ethical” mean? People have different ideas about what is and isn’t moral, and these ideas might have roots as deep as their religious beliefs or what they believe is right or wrong in business dealings.
However, there is a universal ethical principle—treat people how you would like to be treated. This tenet supports all religions and cultures. The “Golden Rule” is another name for this belief. Therefore, an ethical investor selects an ETF that seeks to invest in businesses that follow this guiding concept.
ETFs that Benefit the Ethical Goals of Corporations
Ethical investing includes investing in companies whose goals are to maximize investments, which at the same time, allows them to consider the needs of employees, customers, and society as a whole. By taking this approach, they can build long-lasting relationships, and ultimately make more money.
Supporting a Sustainable and Ethical Investment Goal
If you want a fund that focuses more on just making money, you should look at an ETF fund that connects with your investment goals morally and sustainably. That’s because sustainability is strongly intertwined with moral ETFs.
Ethical Sustainability: What It Means for You
Ethical sustainability refers to the environmental aspect of sustainability. In other words, you want to veer away from companies that harm the environment. Your focus is on keeping things sustainable while making money.
How ESG Fits in with Ethical Investments
This is important to keep in mind when choosing an ethical ETF. You also need to consider the role of ESG funds. ESG represents Environmental, Social, and Governance practices as they relate to business investments and operations. These funds, although ethical, are not strictly defined that way, as they also seek to optimize earnings.
Ethical funds are different, as they don’t take into consideration whether or not the company is profiting financially. It is not part of the equation. They are primarily focused on ensuring that companies act morally.
Supporting a Single Cause
If you have a specific cause you wish to support, you might consider looking at a single-themed ETF. Doing so will allow you to narrow your focus so you can feel good about what you’re supporting personally and financially. This is the quickest way to invest ethically.
Making an Ethical Investment Decision
Most people have ethical interests that go beyond a single theme. If this describes your goals, it’s best to search out ETFs that cover your personal values with respect to the environment, foods, and the products people use daily. When you find what you’re seeking, you’ll know it, as you’ll see that what you’re supporting supports the public at-large as well.