Here’s Why Most Investors Define Ethicality Differently

Today, investors are waking up to the fact that their investment dollars do actually make a difference in the corporate world. That’s right; beyond the potential financial returns, you can actually push businesses to be more ethical with regard to the environment and society. 

Now, knowing that you want to invest in ethical companies is the easy part. Understanding what that really means and, consequently, taking action is a whole different story. And that’s because finding a universal definition for “ethical” is a bit tricky. What is ethical to one investor might not make the cut for another.

Basically, how you define ethicality will depend on one or more of the following factors:


For most investors, ethics is about what they feel is right or wrong. So, most will use their personal moral compass to gauge whether a company “feels” ethical enough to invest in. But everyone is different, and so are their feelings, which makes this measure quite inaccurate and erratic. In fact, feelings can be skewed easily, and are often a very unreliable way of assessing what is ethical and what is not.


For others, religious beliefs and teachings dictate what is ethical when it comes to business practices. Granted, high ethical standards are encouraged in religions across the board. Religion, in part, increases motivation to act ethically. However, not everyone is religious, so ethics cannot be confined to just religion alone.


Then we have individuals who define ethics based on traditions. That is the beliefs and practices passed on from people from generation to generation. These traditional standards for ethicality can vary greatly depending on the originating customs. What one community holds dear in one part of the world may differ from another in a different geographical location.


Some investors define ethicality in the context of the law. In other words, they define ethicality by looking at whether something falls within the law or not. Specifically, this approach hinges on the assumption that the law defines minimum standards of behavior that are normally seen to be ethical and socially responsible. That means that a business is deemed ethical if it is complying with all applicable laws, regulations, and standards.

Modern Societal Acceptance

Other investors define ethicality in the context of what modern society accepts. Essentially, they use values and social norms as a benchmark for gauging whether a business is ethical or not. As a result, a business is said to be ethical if it satisfies the social norms and values of the community in which it operates. Such companies are more likely to win the trust of customers and attract stakeholder loyalty.

How You Define Ethicality Is More Than All These Aspects

It is important to note that defining ethicality stretches beyond these contexts. If a business is truly committed to being ethical and socially responsible, it needs to consider the overall impact of its operations on the environment and society. 

At the end of the day, a business should ensure that its practices align with what your community deems to be ethical and moral. This calls for a proactive, holistic approach to ethicality.


What do you think?

Written by Virily Editor

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