Last Updated on August 29, 2022 by rida
ETF stands for ‘exchange-traded fund.’ Ethical ETFs are a type of exchange-traded fund to invest with an ethical focus. In general, ETFs look to invest in companies showcasing clear social responsibility and those that create more benefit than a detriment to human life and to society.
In the scope of ethical investing, ethics are not clearly defined outside of The Golden Rule: treat others the way you wish to be treated and act with kindness towards others. By basing your investing values around The Golden Rule, you can choose the best ETF for your ethical investments. Not all ETFs are equal, and some prioritize certain aspects of sustainability over others.
There are different types of ETFs designed to support companies executing social responsibility. Depending on how socially conscious the company is and what you plan to achieve in finding an ethical fund, different types of ETFs may be more or less beneficial to you. To learn more about finding an ethical fund that fits the needs of your investment and investing values, here is a brief guide on finding the right ETF to invest in.
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Finding An Ethical Fund: Beneficial Corporation Funds
The first type of ETF to consider is beneficial corporation funds. These serve the purpose of making money while establishing a positive impact on the public. This might look like optimizing the value generated for society and business. Investing in an ETF that wants to go beyond making the investor money is an important quality to look out for when finding an ethical fund.
Try Sustainable Funds
There are multiple definitions of sustainability. When it comes to ethical investing, you want to keep this in mind, as not all ETF options will be ideal when you’re working on finding an ethical fund. With this style of ETF, it may be that one or multiple areas are sustainable, but others are not.
For those domains that are overlooked, you’ll want to determine if they are doing more harm than good. It is possible to find ethical, sustainable companies that will work to prevent negative consequences. Do your quantitative research and decide for yourself if you’re finding an ethical fund.
ESG Funding Options
ESG funds (Environmental, Social, and Governance) fixate on profit, which is not considered ethical. To maximize profit, ethical factors that may take a hit to achieve this are not significant concerns with these funds.
ETFs With Single Focuses
Single-themed ETFs are for investors interested in finding an ethical fund based on a specific issue. In some cases, having a narrow focus is enough to establish the fund and successful outcomes. In other cases, this style can backfire because additional ethical considerations challenge the ethical focus of the single-themed ETF focus.
Find The ETF For You
Finding the right ETF for you is what you aim to achieve by achieving funding. Find an ETF that meets your needs, and don’t settle for less than what is needed to address your mission.
Read More: How to Make Your Cosmetics Ethical and Sustainable
