Insights
Ethical Hotline: How do you invest ethically?

There's no standard definition of what Ethical investing is in practice. Generally it means having non financial metrics as part of your decision making process because you care about the impact your decisions have on the world around you.

With that in mind we'd suggest you create your own mini ethical investment policy. (We've created a simple resource you can use to help build your own ethical investment policy, follow this link to use.)

This can help you decide which companies you're comfortable to have in your investible universe. To build a basic version think about these things:

What are my principles or values?
You need to know what matters to you to know what you'd like to seek out or try and avoid.
To uncover this, consider things like:

- What do I think is right?

- What do I think there should be more of?

- What do I admire in other people?

- What's something I'd never compromise on?

- What do people in my life often compliment me on?

Examples of values: compassion, fairness, security, ambition, success, efficiency, loyalty, dignity.

Take our values quiz

Now you know more about your values, you can think about the things you want to limit or try and avoid.

Some common exclusions are alcohol, pornography, gambling and tobacco. Check out a company's annual report to learn whether it generates revenue from these activities.

Then you can shine a light on the flip side: what do you want to elevate, deepen or grow?

If you really value protecting nature, you might want to seek out some Green Bonds or companies involved in renewable energy.
If you really value human rights, you might want to seek out companies with strong labour practices, fair supply chains, and policies against discrimination and censorship. Again you can view annual reports or sustainability/responsibility reports to learn about this.

If you really value fairness, you might prioritise companies with good human rights records or companies that have been transparent about modern slavery and open about dealing with it. You might seek out companies who report on their gender pay gap. Or companies producing technology designed to solve problems you care about.

All of this helps you build a profile of what you're looking for, along with good financial metrics, when you seek out investments.

It can also help you figure out your priorities. Remember, nothing's perfect, and you'll need to balance competing interests – but the clearer you are about what you want to try and avoid, what you want to thrive and why, the easier your investment decision making and research will be.

And you can always seek out the help of a financial adviser who's job it is to provide recommendations just for you – consider taking your own Ethical Investing Policy to them and asking for guidance on where to invest based on your personal position.

Submit your own question to the Ethical Hotline here!

The views expressed here are of a general nature and are not specific to Pathfinder's product.