Personal investing has risen in popularity thanks to the rise of low deposit minimum stock broker services like Robinhood. Now almost anyone can start investing. However, before you start depositing your hard-earned cash into a service you don’t fully understand, it is crucial you do your research about the ins and outs of investing.
There is a lot of information online regarding how to invest properly, such as how to look at a candlestick chart, how to get started selling puts and calls, how dividend stocks work, and much more. But in this article, we will examine one often overlooked aspect of investing, and that is how to invest ethically by focusing your time, energy, and resources on socially conscious companies. Continue reading below to learn more about what a socially conscious company is, some common examples, and the many benefits investing in one can provide you.
What is a Socially Conscious Company
Being socially conscious fundamentally means thinking about how your actions affect others around you. On an individual level, this is an incredibly simple and easy idea to understand; however, some still struggle with the concept. But when we scale being socially conscious to an entire company, we see that a single company interacts with an exponentially growing number of people and outside sources. That means for a company to be socially conscious, they have to put in the effort.
Examples of Socially Conscious Investing
- One of the most common examples of socially conscious investing is avoiding companies that produce a product you view as harmful to the greater society. Typical areas of avoidance are; energy companies that work with fossil fuels or companies that sell arms and ammunition.
- Conversely, socially conscious investors will seek out companies that work in industries that fit their values, such as alternative energy and sustainability, affordable health services, etc.
- Valuing a company’s reputation among its employees and those it interacts with is another example of socially conscious investing. If a company has a track record of treating its employees poorly or providing hazardous working conditions, a socially conscious investor may avoid them.
Benefits of Socially Conscious Investing
You are Practicing What You Preach
If you are vocal about your beliefs, it only stands to reason you would want to practice what you preach with your investments. By taking the time to research the company’s practices and not simply looking at the bottom line before investing your money, you can sleep easier at night knowing you are not hypocritical.
Socially conscious investing also allows you to take a practical stand for your beliefs. Most people have firmly held beliefs and morals, but how to make a change to see those beliefs through and make the world a better place can be a challenge. However, with socially conscious investing, you can reward companies who share your values and take an active approach to make the world better.
You Are Incentivizing Companies to be Socially Conscious
Most companies, especially older ones, are only concerned with pleasing one party, their shareholders. That means profit and the bottom line come first and carry the most importance. However, if investors begin to prioritize social responsibility before profit, it incentivizes these companies to start thinking ethically and making changes that can help the world. There is a reason many companies are committing to reduce their carbon footprint in a particular timeline. Unfortunately, it’s not simply because it is the right thing to do but also to draw socially conscious investors. As long as these companies see a return on their socially conscious efforts, they will continue to reduce their negative impact on the world. So by practicing socially conscious investing, you can be a part of a movement to incentivize international corporations to change their ways.
It Feels Even Better When Your Investments Pay Off
Out of all the benefits listed in this article, this is easily the most self-serving; however, that doesn’t make it any less true. When your socially conscious investments pay off, it feels even better. Anyone who has invested before understands the rush of excitement you get when your investment pays off; that feeling is only exemplified when it happens for a cause you are passionate about.
Take Action With Socially Conscious Investing
Everyone has values and beliefs that they hold strongly. The challenge most of us face is how to apply those values into the world to actually make a difference and bring about the change they want to see. With socially conscious investing, you can take actionable steps to incentivize and reward companies that hold the same values and beliefs as you. If you are looking to make your money work for you and make the world a better place than when you found it, we can’t recommend socially conscious investing enough.
