A good place to start with ethical investing is being clear how you want to reflect your values in your investments. What do you want to support? What would make you feel uncomfortable or compromised to profit from? What are your non-negotiables? Values are personal. What is important to you may be different to someone else.
Tobacco, alcohol, animal testing and weapons are just a few things that can polarise opinion and be perfectly acceptable to one person while unacceptable to someone else. Conversations with friends and family can be a good starting point to understand what is important enough to you to shape how and where you invest your money.
Not all ethical investment options are the same
Not all ethical investing options are the same. At one end of the scale, they exclude investments in certain industries (like weapons, coal or tobacco), and at the other, they invest in activities that are as much about tangible social or environmental results as they are financial (like sustainable housing or new clean energy generation).
One example of exclusions are the six KiwiSaver default schemes which are required to exclude investments in some weapons and investments that are materially involved in the business of fossil fuels.
Another approach is where providers continue to invest in companies where environmental, social or governance (ESG) concerns exist, and claim to use the influence which comes from being an investor in those companies, to improve their business practices (for example by using voting rights). Whether this approach is successful, particularly where the investor seeking the influence has only a modest investment in the company, is a matter for debate.