Over the past few years, responsible investing has become a popular choice for investors who value civic responsibility, social equality, healthy living and environmentalism. While responsible investing was once a fringe investing movement, investing responsibly has gained traction on digital investing hubs like Reddit and investing forums so that socially-conscious investing might now be considered mainstream.
However, for those still unfamiliar with responsible investing, ethical investing is built around the idea that investors should only invest in companies that have a positive affect on humanity. While soft drink companies, tobacco corporations, and gun companies are often among the most profitable companies to invest in, the responsible investor eschews these companies and chooses to invest in companies that champion health, positivity, kindness, and ecological sustainability.
Critics Point to Inconsistencies in Ethical Investing
As ethical investing has come into the spotlight, critics have emerged who point to the inconsistencies in ethical index funds. For example, some ‘responsible’ index funds have holdings in oil companies, while other ethical index funds refuse to invest in petroleum all together.
This inconsistency has caused some critics to question how different funds are defining themselves as ethical. Some critics believe that all oil corporations are unethical. Investment fund managers counter this claim by arguing that they are only investing in oil companies that have a track record of acting responsibly and championing the environment.
The Eco-Friendly Economy
While responsible investing has started to draw critics, ethical investing will definitely become a permanent fixture in the investing landscape. According to experts at The Global Commission of the Economy and Climate, a $26 trillion eco-friendly economy will emerge in the coming years. This industry will offer a suite of intriguing investment opportunities for folks who want to invest ethically.
Some of these opportunities will materialize in industries like water and food sustainability, recycling businesses, and with companies who are focused on improving pre-existing social infrastructure. Another intriguing area of potential ethical investment is with companies who want to responsibly improve America’s overloaded healthcare system.
But responsible investing isn’t just about the future. Right now, companies are creating products that are eco-friendly to appeal to the ethical crowd. For example, many beverage companies are using reusable glass bottles as an alternative to wasteful plastic products.