The system used to rank companies based on ethicality can be considered three parts of a whole. The entire system is based on the Golden Rule, which in investor terms, refers to the application of the company’s ability to contribute the least amount of harm and the most positive contribution to society and the environment. Additionally, thematic considerations such as access to clean water, food, and healthcare are factored into the ranking process. Lastly, companies are assessed using quantification, a mathematical process that investors use to assign a measurable amount that reflects a company’s overall value on its human impact.
Each of these parts is considered collectively by firms with the experience and understanding of how to carry out quantification so that a single dollar amount can be attributed to a company’s overall contribution to humanity. To rank companies on ethicality, the numbers determined to reflect a company’s value are placed within an investment portfolio, with the most ethically sound companies listed at the top. Companies that lack the ethics and sustainability factors to be considered sustainable investments are not listed in the portfolio and are not further considered.
Investors primarily look for companies that can contribute positively to humanity and refrain from causing significant harm. While the value of human life cannot be simplified down to a digit, it is acknowledged that points against companies for consideration are those that cause loss of life and decrease lifespan. For instance, tobacco companies are not on investor portfolio lists because they significantly hurt humanity. Continue reading for a further breakdown of the system used to rank ethical companies.
More About Quantifying Ethical Companies
While the quantification process is ultimately numerical, the assessment considers thematic concepts influencing how these dollar amounts are assigned. For instance, investors advocating for sustainability will utilize factors such as a company’s contribution to employees, consumers, and society to outline their calculations for further consideration. The positive and negative impacts of ethical companies will include positive and negative contributions such as reduced greenhouse gas emissions (as a positive) to poor employee treatment (as a negative).
Bypass Bias To Make Sound Investment Decisions
Since investors have their own set of values and principles, to make sound investment decisions, investors have to find a way to bypass personal bias and work to determine which investments result in the most positive and beneficial outcomes and the least amount of harm to society. Viewing the impact of ethical companies in numerical form eliminates the individual variables that could lead to personal opinions overpowering the best choice for the collective. These variables are converted to dollars to maintain an objective rather than a personal assessment of the contributions of ethical companies.
Factoring In Human Lifespan Influences
Measuring human impact also requires that investors consider the variables that impact the number of years that can be added to human life based on company activities. Research is conducted to assess a company’s contributions to a specific theme of human impact or survival component that either directly or indirectly influences human lifespan. Quantifying through “dollarization” of human life and the value of a life lived well is based on research that considers the economic estimations that go into the value of life. Quantification reviews and determines the overall impact of this theme to establish estimations for the number of years sustained or added to based on the ethical companies and their activities that influence human life factors.
Sustainable investors aim to benefit society and reduce its harm for as long as possible. By relying on economic research that considers lifespan, ethical companies can make sound decisions based on research that supports their investment decisions. Researchers skilled in assessing company influence are involved in quantifying the impact of relevant themes influencing investment decisions.
Sustainable Investors Make Smart Decisions For Humanity
For more information on how quantification takes place on a mathematical level, reach out to a seasoned investment firm with experience using the process. From a layman’s perspective, the main takeaways for understanding the process of ranking ethical companies are to include the positive and negative contributions of a company’s behaviors in your evaluation to compare and make the best decisions for humankind.