Ethical investing involves the selection of investment securities based on one’s ethical principles. This investment approach usually involves the exclusion of certain types of securities, such as those of issuers that are engaged in the following activities:
Coal and fossil fuel production
Conversely (or in addition to the preceding restrictions), an investor may prefer to acquire the securities of issuers that have good records of environmental practices, or which treat their employees in a fair and equitable manner.
This approach to investing does not necessarily generate the highest return for an investor, especially since some of the excluded activities just noted tend to produce above-average profits. Consequently, and as is the case with any investment, the prudent investor must engage in thorough research before engaging in ethical investing.