what is ethical investing 
ethical investing refers to the practice of using one s ethical principles as the primary filter for the selection of securities investing ethical investing depends on the investor s views ethical investing is sometimes used interchangeably with socially conscious investing however socially conscious funds typically have one overarching set of guidelines that are used to select the portfolio whereas ethical investing brings about a more personalized result understanding ethical investingethical investing gives the individual the power to allocate capital toward companies whose practices and values align with their personal beliefs some beliefs are rooted in environmental religious or political precepts some investors may choose to eliminate specific industries or over allocate to other sectors that meet the individual s ethical guidelines for example some ethical investors avoid sin stocks which are companies that are involved or primarily deal with traditionally unethical or immoral activities such as gambling alcohol or firearms choosing an investment based on ethical preferences is not indicative of the investment s performance to begin investors should carefully examine and document which investments to avoid and which are of interest research is essential for accurately determining whether an investment or group of investments coincides with one s ethics especially when investing in an index or mutual fund history of ethical investingoften religion influences ethical investing when religion is the motivation industries with operations and practices that oppose the religion s tenets are avoided the earliest recorded instance of ethical investing in america was by the 18th century quakers who restricted members from spending their time or money in the slave trade 1during the same era john wesley a founder of methodism preached the importance of refraining from investing in industries that harm one s neighbor such as chemical plants 2 another example of a religious based ethical investing regime is seen in islamic banking which shuns investments in alcohol gambling pork and other forbidden items 3the amana mutual funds trust offers investment products adhering to islamic banking principles such as prohibiting gambling maisir paying or charging interest riba and charging more money for late payments mur ba ah 45in the 20th century ethical investing gained traction based on people s social views more than their religious views ethical investments tend to mirror the political climate and social trends of the time in the united states in the 1960s and 70s ethical investors focused on those companies and organizations that promoted equality and rights for workers and shunned those that supported or profited from the vietnam war 6starting in the 1990s ethical investments began to focus heavily on environmental issues ethical investors moved away from coal and fossil fuel companies and toward those that supported clean and sustainable energy today ethical investing continues to primarily focus on impacts on the environment and society 6