How to trade ethically
James Bevan of CCLA explains how to trade ethically. Ethical trading is looking beyond the balance sheet of a company and into moral principles. This can mean what the company stands for, produces and where it operates and exports to.
An investor must consider the wider implications of the firm’s decisions.It involves studying the local environments and potential conflicts, and is becoming increasingly important for those trading internationally.
James Bevan highlights the difference between ethical trading and responsible trading. The latter considers the environmental, governance and political risk. Climate change is also a factor to consider, but not all ethical funds do or indeed have to do so.
Not all ethical funds agree on matters such as green energy, religion or animal welfare, so when choosing an ethical fund to work with, it’s important to research where their priorities lie to compliment your own.
For example, if you are going to invest in supermarkets, you must consider that the store will be involved in tobacco so it’s important to think outside the box.
Typical pornography, incriminate weapons, land mines and online gambling are sectors to avoid if you are committed to making ethical decisions.
On the other side of the coin sustainable energy and creating wealth in emerging markets are all very positive investment strategies.