Sustainable finance & investment
Ethical investing
Definition
Ethical investing is the practice of choosing investments according to the investor's moral or religious values, classically by negative or exclusionary screening of companies engaged in activities deemed unethical — typically alcohol, tobacco, gambling, weapons, pornography, or activities contrary to faith principles or international conventions.
References
definition, typical exclusions, faith bases
screening typology, contrast with impact investing
practice description, no unified standard
Overview
What it means
Ethical investing is the oldest form of responsible investment, with roots in religious investment rules (Quaker and Methodist traditions) and 20th-century faith-based funds. Unlike ESG integration, which targets financial materiality, ethical investing prioritises values alignment; unlike impact investing, its classic mode is avoidance rather than proactive impact.
Screening later expanded to positive, best-in-class and norms-based approaches.
How it is used
Applied by faith-based and values-driven investors, charities and retail funds; shapes exclusion policies of many institutional investors.
Why it matters
It is the historical foundation from which SRI, ESG and impact investing evolved, and remains a major retail segment.