Ethical investment refers to an investment whereby an investor does a business that aligns with his values. Ethical investments such as manufacturing green products will positively impact the environment and are therefore considered ethical.
However, ethical investment requires commitment because some sustainable means of production have an added cost. Also, some ethical investments may not attract considerable profits in a short time.
The good thing is that ethical investments guarantee long returns due to strong social support. The article addresses some of the merits and demerits that an ethical investor should expect during the venture.
Merits of Ethical Investments
The Business Enjoys Sustainable Returns
At the start, ethical investments may not enjoy a large profit margin due to the heavy capital layout. But as time passes, these companies can outweigh unethical investments. For instance, the clean energy generation program is ahead of the fossil fuel industry.
Ethical Investments Can Restore the Business Portfolio
If your business is at risk of collapsing due to negative social and environmental impacts, you can restore the company’s status by investing in ethical practices. Ethical practices can change the bad image the organization might have on society and help to restore trust with its buyers.
You, Will, Align Your Values with the Investment
Investing in socially responsible business makes one feel proud of whatever he is doing. Besides making a profit, you already know that you are doing what is ethically correct; you are not doing what is beneficial to you but is also helpful to the world. Trying to heal the ramifications caused by others gives an investor peace of mind.
Demerits of Ethical Investments
There Is a Limitation of Investments Alternatives
Investing ethically means that you will have to avoid some investment options even though they promise high-profit returns. With increasing competition in the market today, you must have vast choices to venture into, many of which are unethical. You may also have limited access to investment funds because some lenders may not be convinced by your investment plan when you write your proposals.
Some Business Realities hinder Ethical investments.
When venturing into ethical investments, it is always good to consider the realities of commerce that are out there. Sometimes people may consider buying products from unethical businesses simply because they are cheaper than green products, even when they know that such products have a negative impact.
For instance, people continue to purchase cars that run on fossil fuels even when they know that electric vehicles are more environmentally friendly than fuel cars; the factor here is the cost of the two products. So even when planning to take a route in ethical investment, it is good to consider the underlying economic factors and try to make your products more affordable.
Summary
Several advantages come with ethical investments, such as having a sustainable return, building a good business portfolio, and keeping your investment in line with your values. However, due to the underlying economic factors, there are demerits such as limitations of investment alternatives and affordability.
