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Defining Ethicality In The World Of Sustainable Investing

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In the context of sustainable investing, ethics are highly specific and carefully defined. By establishing clear principles of ethics, ethical investors can ensure that they always make the best possible choices of companies to invest in. Living up to the standards of ethics utilized by investors means prioritizing sustainability and social responsibility; this requires following through on the general conditions that fall under applying the golden rule. 

The golden rule means doing no harm and treating others with sincere consideration. Investing decisions guided by these ideas require investors to look at the total impact of a company’s behavior and compare and assess the amount of good versus the amount of harm the company is contributing to humanity. Using quantification, ethical investors can determine the value of the benefit to the detriment, which ultimately informs them whether the company is an ethical investment. 

While no business is ideal, comparing the positive and negative contributions established by a company gives investors insight into the overall ethics of a business. By identifying which companies to invest in and which firms to no longer consider, an ethical portfolio is easier to develop and helps investors ensure that their decisions are the best for society. For more detail into the definition of ethicality as it pertains to sustainable investing, read on. 


How Do Ethical Investors Determine Ethicality?

Ethics are complex, whether you’re dealing with what to eat for dinner or the state of the world. We cannot escape these complexities without acknowledging their existence and creating a plan to work with them to achieve ideal outcomes. Ethical investors are aware of these expectations as they understand that it is only possible to establish ethicality with investments by considering humanity and the terms that produce the best outcomes. Motivated reasoning is not a concern so long as ethical investors follow the general guidelines of the golden rule and quantification for sustainable investing. 


The Sustainability Assessment Process Broken Down

  1. We can break down how sustainable investors define ethicality by focusing on the dollar values assigned to the acts associated directly and indirectly with the company. 
  2. From there, we can consider the company’s positive or negative actions and how they relate to humanity, the environment, and the world. Ultimately, the goal is to compare these dollar values and create ratios of positive to negative contribution
  3. A company that produces more negative than positive contributions to humanity will be dismissed from the investor portfolio. For each company under consideration, this process must take place to ensure that all investment decisions possess the ideal circumstances of ethicality to be considered a sustainable investment. 

Ethicality In Sustainable Investing Is Cut-And-Dry

To reduce the complexity of ethical debates surrounding investment decisions, ethical investors rely on the golden rule to guide their decisions. The golden rule is a universally accepted principle of ethical thought and application. Ethical investing is cut-and-dry: Investors compare various dollar values to determine the overall human impact and, ultimately, the ethicality of an investment.