Ethical Investing – Matching Conscience with Returns

Growing concerns over the environment and ethics are gaining the forefront over gains. How to ensure your legacy stays pure for future generations. 

 

Modern investment theory suggests that you must diversify your investments and stock in order to protect against losses. This often means you inevitably buy into a variety of stocks and bonds across multiple investment sectors, including large corporations which carry with them unsavoury reputations due to the business they are in. These include big businesses in the petroleum, tobacco, sugar and fast food industries. Understandably, a growing number of ‘ethical investors’ do not wish to invest their money and support into these businesses which place more value on profits than the general public’s health and well-being. 

 

Luckily, there a some ethically prudent investment options and ETFs out there for the more conscious investor. However, placing all your capital into these funds isn’t diversifying your investment as there aren’t many to pick and choose from, especially if you are still wanting to yield high returns. As a result, it is becoming increasingly important for ethical investors to conduct their own research into businesses which have a positive social impact with low carbon footprint in which to invest their money.   

 

There are a few ethical concerns investors need to consider when investing in real estate both locally and abroad. Finding the right investment options which suit your ethical compass is made easier when you understand what to look out for. We have compiled a brief list of things to look out for when investing in local and global real estate.

 

Environmental impact

Large buildings like high-rise apartment blocks, warehouses, shopping malls and hotels have large carbon footprints. Buildings across the globe are responsible for almost a third of global greenhouse gas emissions. With the growing number of ethical investors and a global mindset toward more sustainable methods, more building contractors and real estate businesses are focusing their attention to reducing their building emissions and finding new ways to keep their carbon footprint low. This involves reusing and recycling building waste and adopting the latest renewable energy technologies in new buildings. So it is a good idea to research which building contractors and real estate businesses are making great strides with their carbon emissions if you are looking to invest your funds into real estate with an environmental conscience. 

 

Social impact

If you are looking for more ethical investment other than environmentally friendly real estate with low carbon emissions, then perhaps consider investing in real estate which serves a social purpose. Of course, real estate low on carbon emissions also serving a social purpose is the first prize, but they are increasingly difficult to come by). Buildings such as hospitals, clinics, GP rooms, schools, policie buildings and other civic facilities make a positive impact on their immediate community and influence social harmony. Although this type of real estate investment sector commonly does not yield higher returns than that of commercial property, the positive social impact these properties provide are seen as a way of uplifting communities, driving social consciousness and change and ultimately changing the face of an area for good. This drives people to the area and increases the overall value of the surrounding properties. 

 

Commercial land exploitation

When investing in real estate through a broker or firm your money will often be placed into large real estate business with overseas presence looking to build property on foreign land. This can come in the form of residential housing, hotels and shopping malls. However they sometime can include property for large corporations and factories and warehouses. These are associated with land grabs and the exploitation of foreign land where often locals are forced out of their land when big business purchases the land. Apart from the environmental impact these properties incur, there are also social and cultural repossessions. Because of this, it is vital for investors to investigate what kind of overseas commercial property their money is invested in and what social and environmental impact they are having on the land and community. 

 

Remuneration

When investors place their money into commercial property and businesses offshore there are a few things to consider. The widely publicised low wages and poor working conditions found in the offshore sweatshops of large brands like Nike and Wal-Mart raised awareness of some poor business practices of large businesses which have a lot of local and international investors. So for anyone wanting to invest their money in ethical businesses which have offshore stations, they should ascertain whether they look after their employees and pay above the minimum wage and empower the community they find operate in rather than oppress them. 

 

As you can see, the model for ethical investment requires a hands-on approach to investigate where the money you invest is going and why agenda it is advertently and inadvertently supporting. When dealing with investment brokers whose primary purpose is to generate high returns on your investment on your behalf, it is inevitable that large parts of your investment will go into businesses and industries which some people deem as unsavory. It is therefore critical for all ethical investors to investigate where their money is going and to whom, and what social and environmental impacts their investments will be supporting. To recap, if you are more concerned with high returns than ethical practice then don’t bother knowing where your money goes. Of, however, you hold strong social, environmental and ethical convictions then it is worth finding out which businesses you wish to support.