An Introduction to Ethical Investing: Aligning Your Values with Your Portfolio

For many, investing is not only a path to financial growth, but an opportunity to make a difference. Ethical investing, sometimes referred to as socially responsible investing (SRI) or sustainable investing, is a strategy gaining momentum among conscientious investors.

What is Ethical Investing?

Ethical investing generally refers to an approach where investors select and manage their portfolios not just based on financial returns but also on their personal values. It is a method that seeks to balance profit with social or environmental impact. Ethical investing often incorporates Environmental, Social, and Governance (ESG) factors into investment decisions. These factors cover a range of issues, including climate change, human rights, board diversity, and ethical business practices.

Strategies Tailored to You

Ethical investing is not a one-size-fits-all concept; it's adaptable and personal. Investors can employ various strategies to align their investments with their values, including:

Shareholder Engagement: Investors may use their shareholder power to influence corporate behaviour. By actively participating in company decisions, they can drive positive change in environmental practices, social responsibility, and corporate governance.

Thematic Investing: Investors can channel their funds into sectors that align with their ethical concerns based on ESG themes such as sustainability, clean energy, or community relations, contributing to the growth of socially responsible industries.

Negative Screening: This approach involves excluding investments from certain industries or companies based on their behaviour. For instance, investors may avoid industries like tobacco or weapons manufacturing due to their adverse societal impact.

Impact Investing: Going beyond financial returns, impact investments are those that specifically aim to generate social and environmental benefits despite returns potentially being lower than the market rate. This can include investments in affordable housing or microfinancing.

Assessing ESG Considerations

Understanding ESG considerations is important for ethical investors. However, it is essential for investors to maintain a critical eye as ESG metrics lack standardization and self-reporting can vary widely.

The Autorité des marchés financiers (AMF) provides a detailed list of required disclosures for investment funds and publicly traded companies, and where to find them. When evaluating investments, consider the following:

Investment Funds: Investment funds must disclose their principal investment objectives. If a fund is taking ESG factors into consideration, it must provide details on them in its documentation. Explore key documents like the prospectus, Fund Facts or EFT Facts, and Management Report for Fund Performance (MRFP). Additionally, scrutinize proxy voting records and reports on sustainable investment approaches.

Publicly Traded Companies: Investigate prospectuses, news releases, and material change reports to gain insight into a company’s ethical practices. Companies often release reports detailing their sustainable initiatives, although these are voluntary and may lean towards promotional content.

Working with an Investment Advisor: Collaborating with a professional who is well-versed in socially responsible investments can provide valuable guidance. Organizations like the Responsible Investment Association can assist you in finding advisors specializing in ethical investing.

Tools for identifying ESG-compliant companies include:


Ethical investing involves highly individualized considerations. Answers to specific questions should be determined with the advice and assistance of a qualified lawyer and/or licensed
financial professional.

Sources and Helpful Links