How to Invest in Ethical Stocks 2024
There are a variety of themes that can develop within global stock markets. A relatively new theme has been the concept of ethical investing.
What is ethical investing? This is the concept of buying stocks and shares based on your own moral principle or the moral principles of a company.
In this ‘How to Invest in Ethical Stocks’ article, we cover what ethical investing entails and a list of top ethical stocks to watch this year.
Table of Contents
Why Start Ethical Investing?
There are a wide range of stocks available to invest in that cover a broad range of stock sectors such as finance, energy, retail, etc. It is now much easier to invest in companies whose vision and practices are aligned with your own.
While ethical investing will have a different meaning to every individual person, the concept of it is similar to socially responsible investing (SRI), environmental, social and governance (ESG) investing and social impact investing.
Essentially, the concept involves investing in companies that have a positive impact on the world. This could mean electric cars or clean energy companies and companies that have transparent life cycles of products and materials or companies that have positive work practices.
Ethical investing can also mean avoiding any investments in companies that are considered harmful to society such as tobacco, gambling and weapons companies. According to research from investment bank BNP Paribas, ESG investing is maturing much quicker than originally expected. 22% of investors in its ESG Global Survey integrated ESG into at least 75% of their portfolios.
Identifying Ethical Stocks
Among institutions that try and identify the best ethical stocks to invest in, part of their in-depth research process is to filter investments based on negative and positive screening.
Negative screening includes identifying stocks involved in harmful activities such as tobacco, gambling, weapons, animal testing, etc. This could also include companies which have a poor human rights record.
Positive screening is a research process used to identify companies that are committed to high standards in environmental, social justice and corporate governance. These are companies considered to be ‘ethical’ to invest in but this definition will vary among investors.
List of Ethical Stocks
- Starbucks – Founding Member of the Transform to Net Zero Coalition
- Microsoft – Committed to Removing More Carbon Than They Have Emitted by 2050
- NVIDIA – Committed to Not Using Minerals in Chips from Conflict Zones
- Beyond Meat – Leader in the Plant-Based Meat Industry
- Tesla – Pioneer of Electric Vehicles & Leading the Way in Green Energy
- First Solar – Leading Provider of Solar Solutions & Technology
- Novo Nordisk – Transitioning to Zero Environmental Impact Business Model
This list is not exhaustive and many other companies are committing more resources to become more sustainable and ethical. However, the list does serve as a basis to build upon your own research and analysis when ethical investing.
Analysis of Ethical Stocks
When choosing ethical stocks to invest in, it is important to not only do thorough research and analysis but also exercise good risk management. Investments go up and down so make sure you position size correctly to build a diversified portfolio of ethical stocks and shares.
It’s also wise to remember that the best ethical shares to invest in can only be known after the event. Therefore, keep your risk low and use the right type of investing account.
For example, the Admirals Invest.MT5 account allows you to buy ethical shares UK and ethical shares US with competitive commissions and low minimum fees of just £1 and $1 respectively.
1. Starbucks – Founding Member of the Transform to Net Zero Coalition
Starbucks (SBUX) performs highly on the ESG rating scale. For years, the company has focused on making sure its coffee beans come from regions which support farmers with fair trade practices and are ethically sourced.
Within its corporate social responsibility mandate, Starbucks has also made a commitment to build new stores that are green and to remove the use of all plastic straws. By 2030, Starbucks also plans to have reduced their greenhouse gas emissions by 50% and send 50% fewer materials to landfill sites.
Starbucks also promotes ethical working practices with 100% gender and racial pay equity. 54% of its senior leadership team are women. The company also plans to hire 10,000 refugees globally by the end of 2022.
Not only is Starbucks the founding member of the Transform to Net Zero Coalition which includes companies such as McDonald’s, Nike and Microsoft, but they are also transparent in whether they are reaching their goals or not.
Every year, Starbucks releases its Global Environment and Social Impact Report where you can view the success and progression of its commitment to ESG practices.
With the Admirals Invest.MT5 account you can invest in ethical stocks such as Starbucks with a competitive commission of just $0.02 per share and a low minimum commission of just $1!
2. Microsoft – Committed to Removing More Carbon Than They Have Emitted by 2050
Microsoft (MSFT) is another company that is considered to be an ethical stock as it has been carbon neutral since 2012. In fact, the company have also stated that they plan to be carbon negative by 2030 and by 2050 will have removed more carbon from the environment than they have emitted in the
company’s lifetime.
By 2030, Microsoft has also committed to being water positive. This means they will replenish more water than they use by reducing water in datacentre operations, increasing access to water to those who need it the most and digitising water data.
The company has also committed to a plan of zero waste. By 2025, Microsoft plans to eliminate the use of single-use plastic in all primary product packaging while making fully recyclable products and packaging globally.
Microsoft is a company that takes its ESG principles seriously. Every year, the company produce a 100+ page Environmental Sustainability Report to highlight its ethical practices and progression.
With the Admirals Invest.MT5 account you can invest in ethical stocks such as Microsoft with a competitive commission of just $0.02 per share and a low minimum commission of just $1!
You can also learn more about Admirals' ESG commitment and efforts here.
How to Invest in Ethical Stocks
Ethical stock investing can be done in just a few simple steps as outlined below:
1. Do Your Ethical Investment Research
There are thousands of stocks to potentially invest in. To find ethical stocks to invest in research companies whose values are aligned with yours. Investors have the option of performing technical analysis research or fundamental stock analysis research.
For example, many companies such as Microsoft are leading the way in climate change policies. Other companies, such as Starbucks are leading the way in gender and race balances in the workplace.
Once you have found the best ethical shares for you then you are ready to invest.
2. Buy Your Ethical Shares
To start investing in ethical stocks, you need to open a live trading account or demo trading account first. A demo trading account is a great way to start as it allows you to place trades in a virtual environment to practice your skills.
Once you’ve opened one of these accounts, then you can follow the four step process below on how to invest in ethical shares.
- Access your account by logging in to the Admirals Trader’s Room. Here, you can access expert tools, deposit and withdrawal options and more.
- Click on Trade to open the Admirals MetaTrader 5 web platform.
- Search for your stock by typing in the name in the last row of the MarketWatch window on the left. Drag the symbol name onto the chart to view live price information.
- Click New Order at the top to open a trading ticket. Fill in the number of shares and any other details you wish such as a stop loss or take profit price level.
Open a free demo trading account today to practice trading in a virtual environment until you are ready to go live!
Frequently Asked Questions on Ethical Stocks
What are ethical stocks?
Ethical stocks are companies that promote or engage in practices that have a positive and sustainable impact on the world and its people. For example, Microsoft is considered to be ethical on the climate as it has been carbon neutral since 2012.
What is an ethical company to invest in?
Some of the top ethical companies to invest in include Microsoft, Starbucks and NVIDIA. Each year, these companies produce environmental and social impact reports which highlight the success and progression in achieving ethical business practices.
What are unethical stocks?
Unethical stocks are ‘sin’ stocks such as those involved in gambling, weapons, tobacco and adult entertainment. These stocks could also be involved in animal testing, intensive farming and drilling.
About Admirals
Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5.
Learn more about Admirals' sustainable company commitment to ESG principles here.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer or a request for any transaction in financial instruments. Keep in mind that such business analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decision, you should seek the advice of independent financial advisors to ensure that you understand the risks.
