In recent years, investing has radically evolved. People no longer invest for financial security alone. These days, investors are choosing the type of investing that considers humankind. This means that they choose to do the right thing even when investing.
This kind of investing can either be ethical investing or socially responsible investing. It involves incorporating your values and ethics with your investment portfolio to create an ethical portfolio. Here’s how investing and humanity relate.
The value system used to choose investment portfolios is the most fundamental relationship between investing and humanity. The first thing such an investor does is to define their values and then invest in companies whose values align with theirs. The golden rule is to treat others as you would want to be treated. This means being kind to humankind and not hurting anyone.
So, whenever people argue over what is right or wrong, they disagree about how this golden rule applies to their circumstances. Notably, your investment may be someone else’s source of pollution. It could be producing a toxic product to someone else, or the company may be a swindling employer who hurts their employees.
Ethical investing would be much easier if companies could prioritize humankind by balancing their employees, customers, and society’s needs with profits. Therefore, investing and humanity relate to the golden rule. And this rule should be how you create your ethical investment portfolio. So, consider investing in companies that adhere to the golden rule.
Another way investing and humanity relate is through the change humanity brings to investing. An increase in the number of ethical investors may cause a company’s management to rethink its business operations to accommodate the needs of ethical investors. Ethical investing allows you to measure a company’s impact on humankind to determine how good or bad it is doing for them.
From this analysis, you can choose where to invest and which industries or companies to avoid. In addition, it lets you consider your level of ethical tolerance. For instance, can you invest in a company that pollutes a community’s water but has numerous corporate social responsibility initiatives?
This relationship between investing and humankind allows you to stretch your values and morals by not conforming but by doing ample research on a company to avoid greenwashing. There is a metric used to quantify the impact of a company on humankind to understand the unit of human benefit or human suffering the company does. This gives a precise value that represents that company’s value to humankind.
With this value, creating an ethical portfolio is easy. And most companies will adjust their business practices and operations accordingly to meet the standards of ethical investing, or they will miss out on potential investors.
A company’s humankind value is essential in investing as it acts as a filter. For instance, a company with a negative humankind value should not be in your ethical portfolio. So, ethical investing merges investing with humanity to ensure people make socially responsible investment choices to save humankind and the planet.