Ethical Investing: Can You Make Money and Still Sleep at Night?

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Written By: Ogundare Timilehin 


Updated May 30, 2025


Description: Learn how ethical investing brings your money and your values together. Learn strategies, benefits, and how to start with no sacrifice in returns.



Introduction: The Rise of Ethical Investing


In our conscience-made and environs economy, investors no longer wonder if the proverb is alive: Does the old proverb still hold true? Is it still possible to sell out and thrive? Ethical investment has been a big "yes" to that. A specialist niche product when initially introduced, it's developed so rapidly as an affordable and possible means of investing in a phenomenally short space of time. Ethical investment is about being able to invest your money in something you have an interest in—green, human rights, and governance issues—without reducing the prospects of good financial return. Here in this article, we explore whether ethical investing is ethical at all, in fact, if you can do it at all, and how you actually can invest ethically and implement your own personal values into your investments without losing a wink of sleep.


What is Ethical Investing?


Sustainable, responsible, impact, or ethical investing is an investment approach with the goal of financial return as well as social or environmental return. Ethical investing is different from conventional investing in the sense that ethical investing involves ethics and values besides deciding on an investment. 


Core Concept of Ethical Investing


  • ESG (Environmental, Social, Governance) Criteria: Classification of listed companies based on governance policy, social policy, and environment.


  • SRI (Socially Responsible Investing): Screens out tobacco, weapon, fossil fuel, and gaming companies' investments.


  • Impact Investing: Invests in business or activity with targeted social or environmental impact.



Ethical Investing Is Hitting The Sizzling Trend


Why?

Ethical investing is just the way of the world now. The Global Sustainable Investment Alliance (GSIA) puts sustainable investment assets at over $35 trillion globally in 2022, over one-third of managed assets.


Why It's So Hot Now


  • Millennial and Gen Z: They care more about sustainability and would invest in those companies. 


  • Climate Crisis and Social Movements: Increased focus on climate change, racial justice, and gender justice has resulted in greater attention to the social purpose of investing in general. 


  • Regulatory Pressures: Governments and institutions demand more ESG disclosures, so companies report more. 


  • Corporate Responsibility: Less legal troubles and litigations, and thus such companies are riskier bets.


Can You Really Generate Returns from Ethical Investing?


Another of the most pervasive myths surrounding the topic of ethical investing is that it would require sacrificing returns for principle. That is; trade-off between value and profit. But evidence doesn't.



Performance Metrics:


In a survey conducted by Morningstar in 2023, it was discovered that 62% of ESG-themed funds outperformed their non-ESG counterparts over 10 years.


Companies with a good ESG record tend to have improved risk management, reputation, and sustainable business models.


MSCI-Harvard Business School report delivered a robust positive correlation between ESG scores and long-term financial health.


Why Ethical Investments are superior:


  • Less Risk: Shed bad habits of companies so investors won't be in trouble down the line.


  • Consumer Trends: Ethical companies retain high-paying customers.


  • Employee Engagement: Greater staff satisfaction and performance in socially responsible companies.


Challenges and Adversities of Ethical Investing


Worst-case scenario, despite all its goodness, ethical investing does come with some weaknesses as well:


  • Greenwashing: Corpates overstate their drivers on sustainability in an effort to try and appeal to ESG investors. 


  • Lack of Standardization: The ESG ratings are quite disparate depending on the rating agency.


  • Performance Volatility: Some ESG sectors like clean tech are more volatile based on rulebook changes and waves of innovation.


  • Narrow Investment Universe: Excluding entire industries will compromise diversification.



Capitalizing On These Flaws:


  • Employ more than one ESG ratings model (i.e., MSCI, Sustainalytics, Morningstar).


  • Invest in high-performing industries like solar energy, health care, and education.


  • Invest alongside veteran, long-term investment professionals in sustainable investing.


How to Start Ethical Investing: A Step-by-Step Guide


1. Know Your Values and Goals


Start by defining what is most important to you. Climate change? Human rights? Animals? Something else, your values will direct your investment.


2. Analyze Your Current Holdings


Bleed through your existing portfolio and look for corporations or funds in direct opposition to your moral values. Most sites have an ESG score to assist.


3. Invest in the Right Vehicles


  • ESG Mutual Funds and ESG ETFs: ESG-managed and diversified.


  • ESG Robo-Advisors: Green investment products within investing platforms like Betterment and Wealthsimple for your portfolio.


  • Individual Stocks: Only if you're extremely familiar with the companies.


4. Utilize ESG Screening Tools


You can look for websites like As You Sow, Morningstar, and MSCI where they have ESG screening tools where you can screen on the basis of some parameters.


5. Rebalance and Monitor


Sustainability is a continuou

s process. You will have to be in contact with your portfolio from time to time and rebalance it so that it once again aligns with what you believe in.



Websites and Tools for Ethical Investing


  • Robo-Advisors: Betterment, Ellevest, Wealthsimple


  • Mutual Funds: Parnassus Core Equity Fund, TIAA-CREF Social Choice


  • ETFs: iShares ESG Aware MSCI USA ETF, SPDR SSGA Gender Diversity Index ETF


  • Screening Products: Morningstar Sustainability Rating, As You Sow, MSCI ESG Ratings


Key Points: 


  • Ethically investing


  • Sustainably investing 


  • Socially responsible investing 


  • ESG investing


  • How to start ethical investing


  • ESG investment portfolios


  • Best ethical investment funds


  • Best ethical ETFs


Content Ideas:


What is ethical investing and how does it differ from traditional investing?


Top 10 long-term growth ESG investments.


Some pointers on how not to get greenwashed in investments.


Q1: How is SRI different from ESG?


Answer: Mainly a question of combining environmental, social, and governance issues with investment. SRI closes down industries or companies on moral grounds.


Q2: Is ethical investing as good a performer as mainstream investing?


Answer: Same. There has been some research that made us feel that ESG investing will be as good, if not better than, mainstream investing in the long run.


Q3: How do I avoid greenwash investment?


 Answer: Use a few ESG sources of information and require disclosure in a company's sustainability report.


Q4: Does ethical investing have to cost money? 


Answer: No. Start with most robo-advisors and low-capital ETFs.



Conclusion: Profit with Purpose is Possible


Ethical investing is not a trend—It's a revolution of global development, and a revolution to earn money as well. You can sleep well tonight with the right strategy and tools in motion, your money smiling on your face and so bright is the world.


By investing in what matters most in life, you're not so much leaving your fate in the hands of the gods as setting yourself up for long-term, sustainable financial riches.


To answer, your question directly; Can one sleep well and get rich? Yes, through ethical investment. And the answer is a resounding yes.




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