Sustainability is a general term that can be applied in many ways. The versatile use of this word can make it challenging to establish conditions and boundaries around ethical investing decisions. There is, however, one unifying principle that transcends varying definitions of sustainability.

The Golden Rule is the foundational principle ethical investors use to ground their investment decisions. While harm cannot be eliminated altogether, ethical investors seek investment opportunities that contribute the least harm and the most benefit to society, the environment, and the world. Sustainability is grounded in the same principle, making it easier to define within individual investment contexts. 

There are different ETFs that one might consider to be sustainable. Conversely, certain parties may view some of these options as unethical. Unfortunately, there is no way to rule out opinion entirely because everyone is governed by values that influence their thinking and choices. Ethical investors have the mission to do their best navigating the inevitably of motivated reasoning and what it means to consider ETFs in relation to sustainability. For more information on whether socially responsible ETFs are ethical, continue reading. 

Defining Socially Responsible Investments 

With The Golden Rule grounding ethical investment decisions, sustainability aims to abide by this universal principle as much as possible. Various sustainability factors can exist in different investment contexts, and the degree to which they are valued can vary. Ultimately, as long as there is maximum benefit to society and the least harm produced by investment decisions, it is considered a sustainable investment. 

How Funding Approaches Influence Sustainability 

Single-Theme Funding Approach

Different funding approaches can sometimes interfere with the consistency of how sustainability is utilized with socially responsible ETFs. For example, single-theme ETFs focus on a select few social, environmental, and governmental-related concerns but may overlook others that are also affected— and negatively affected by investment decisions. Sometimes prioritizing the part does not reflect the whole picture, which can turn into problems for investors. When only some socially responsible ETFs end up with that status, investments can get complicated.

Exceptions To The Rule: Socially Responsible ETFs 

There are always exceptions to the rule, and with the careful reflection of insights from a seasoned firm, you can be involved with a single-theme fund without contributing significant harm to society and still maximizing public benefit. If this occurs, you can consider such single-themed funds as socially responsible ETFs.  

Benefit Corporation Funding Approach 

Alternatively, you can try Benefit Corporation ETFs if you want to preserve the maximum benefit for all involved (including the environment and the world) and the least harm. Given the immense focus on supporting positive human impact, this investment style is more easily considered a socially responsible ETF and often aligns with ethical investors. 

There Is No Formula: Research And Analyze For The Best Outcomes 

From the get-go, there is no formula to know that you have aligned with socially responsible ETFs. Ultimately, you must analyze and decide whether your funding choices honor The Golden Rule and whether your investment decisions are effective.