Earning a reputation as an ethical company is not easy, especially in today’s business world that prioritizes profit and puts ethics on the back burner.
Despite the difficulty, more and more companies are pursuing the highest ideals of ethicality as this helps them capture the attention of ethical investors and put self-interest aside, putting employees, customers, and investors’ needs first.
This post discusses how companies get the reputation of being ethical investments, helping you invest in companies that uphold ethical practices and ensure you make the right impact on the world you invest in.
How Companies Earn the Reputation of Being an Ethical Investment
Earning a reputation as an ethical investment fund follows three simple steps:
Step 1: Calculating a Company’s Direct Humankind Value
The first step involves looking at how a company, through its actions, impacts employees, customers, investors, and members of society.
It is achieved by asking four questions:
- Is the company profitable?
- Does the company pay its employees well?
- Does the company create good products for its customers?
- What is the company’s impact on society?
Next, the dollar value of each of these impacts is estimated, and the numbers are added to create an estimate of a company’s direct humankind value.
Step 2: Calculating a Company’s Indirect Humankind Value
Companies, including the 100 most ethical companies, collaborate to build and distribute their products. To estimate how a company impacts humanity, you must consider the direct and indirect humankind values of its business partners.
For example, company X uses a lot of electricity, and company Y, which supplies energy to company X, dumps greenhouse gasses into the atmosphere. Company X’s supply chain also features products from manufacturers whose labor practices violate internal labor conventions.
Determining company X’s humankind value is achieved by using a proprietary algorithm to sum up the following:
Direct Values
- Impacts on employees;
- Impacts on customers;
- Impacts on the environment.
Indirect Values
- The overuse of electricity by company X;
- The negative value of the greenhouse gasses released by company Y; and
- The value of the labor violations by company X’s manufacturers.
Step 3: Calculating a Company’s Total Humankind Value
A company’s humankind value is determined by combining its direct humankind value and indirect humankind value.
i.e., Direct Humankind Value + Indirect Humankind Value = Total Humankind Value
Companies are weighted based on their total humankind value scores. Those with higher scores create greater value for humanity and are considered an ethical investment.
Invest In the 100 Most Ethical Companies
Today, more and more people are choosing to invest only in ethical companies. This has changed how companies behave as more of them are adopting behaviors that paint them in a positive light to earn the investment of ethical investors. It also signals the end of crooked, corrupt, and unethical business practices.
If you are an ethical investor looking to make an ethical investment, you can use the steps above to determine whether or not a company has a reputation as an ethical investment. Remember, the higher a company’s total humankind value, the higher its reputation as an ethical investment. Invest wisely and make a difference in the world.
