Can You Be an Ethical Investor? Let’s Talk About It.
One of the best things about this community is the thoughtful questions that land in our inbox, and this one really got us thinking:
"I’ve always been intrigued by investing but have always been put off from an ethical perspective. How do you grapple with the fact that constant pressure on publicly listed companies to provide dividends and improve share price often negatively impacts workplace conditions, encourages offshoring, leads to short-term business planning and essentially contributes to wealth inequality? Is the answer to handpick the companies you are willing to invest in? Or use an asset manager that has an ESG focus?"
SUCH a good question. And honestly, there is no perfect answer, but there is a lot we can unpack here.
Why This Matters
The truth is, investing is not neutral. Where we put our money can absolutely impact the world around us. And yes, public companies are under pressure to deliver returns to shareholders, and sometimes that pressure can drive decisions that are not great for workers, the planet or long-term sustainability.
If you have ever felt torn about investing for this reason, you are not alone. Lots of us do.
So... Can You Invest Ethically?
Short answer: yes, but it is complicated. There are a few different ways people approach this:
1. Pick your own companies
This is the most "hands-on" approach. You could choose to invest only in companies that align with your personal values. Maybe you avoid fossil fuels, gambling, fast fashion, or companies with bad labour practices. The downside? This takes a LOT of research and time. And you end up with a less diversified portfolio, which can increase risk.
2. Invest through ESG funds
Many funds or ETFs now offer options labelled ESG (which stands for Environmental, Social and Governance). The idea is these funds screen companies based on ethical and sustainability factors. Sounds great, right? But be aware, what counts as "ethical" or "sustainable" varies a LOT between funds. There is no one standard. You still need to check how the fund defines its criteria and what companies are actually included.
3. Impact investing
This is investing with the specific goal of creating positive change, like putting money into renewable energy, social housing or companies solving global problems. Again, great in theory, but sometimes these opportunities are more niche, harder to access, or come with higher risk.
Some Things to Keep in Mind
No investment is perfectly “ethical”
Even ESG funds often include big banks, mining companies or tech giants. The system we are investing in is inherently imperfect.
Progress over perfection
It is OK to aim for "better" rather than "perfect." Choosing an ESG fund that aligns with most of your values is a great start. You do not have to solve capitalism on your own.
You can use your power as a shareholder
Owning shares in a company actually gives you some influence. Many funds actively engage with companies to push for better environmental and social outcomes.
How Do We Grapple With It?
At She’s on the Money, we believe you can be thoughtful about how and where you invest, while also recognising that the current system is not flawless. It is about balance.
Investing can be a powerful tool for building your own financial future, especially for groups who have historically been excluded from wealth-building (hello, women). So we encourage people to invest mindfully, do their research, and use the options available to align their investing with their values as much as possible.
Final Thoughts
If this question is on your mind, you are already ahead of the game. Being aware and intentional with your investing is the best place to start.
Whether that looks like picking your own shares, choosing an ESG fund, or just learning more before jumping in, there is no one right answer. And you do not have to have it all figured out on day one.
Keep asking questions, keep learning, and remember that investing is a journey. And yes, you absolutely can do it on your own terms.
