Understanding and Choosing Ethical Investments

Do you want your savings to reflect your beliefs? Are you wondering how to reconcile financial returns with a positive impact on the planet or society? With the multitude of offers labeled "green," "responsible," or "solidarity-based," it can sometimes be difficult to find your way. How can you be sure that your money really finances the causes you care about and does not fall into the traps of greenwashing?

This article is designed to enlighten you. We will decode together what ethical investing is, explore the different options available to you, and give you the keys to make informed choices aligned with your values. Because yes, your money has the power to build the world of tomorrow.

What is Ethical Investing? Above All, a Personal Concept

First of all, it is essential to understand that the notion of ethics is deeply personal. What is ethical for you may not be so for your neighbor. One will prioritize the fight against global warming, another social justice, health, or even impeccable corporate governance. An ethical investment is, by definition, an investment that aligns your capital with your moral principles and your values.

This subjectivity makes transparency of financial products not an option, but a fundamental requirement. To invest consciously, you must know precisely where your money goes and what activities it finances. The objective is simple: allocate your savings to a project or activity in line with your beliefs, whether in exchange for remuneration (the classic investment model) or in a more philanthropic form.

Do Not Confuse Everything: Ethical, SRI, ESG, Solidarity...

The vocabulary of sustainable finance may seem complex, but let us clarify the most common terms to better navigate them.

• Socially Responsible Investment (SRI) is a standardized approach that aims to integrate extra-financial criteria into investment decisions. It relies on the analysis of ESG criteria. There is an official SRI label, but beware: a labeled fund may still include companies whose activities conflict with your personal values (for example, companies in the arms or mining sectors that may have good scores on other aspects).
• Solidarity investment focuses on financing companies and associations with strong social or environmental utility, not listed on the stock market. It may involve projects related to employment, housing, or aid to vulnerable people. Part of the savings can be given as a donation to an organization.
• Green or sustainable investment specifically targets projects with a positive environmental impact, such as energy transition, biodiversity preservation, or sustainable resource management.

Overview of Ethical Investments: How to Give Meaning to Your Savings?

Today there is a wide range of solutions to invest ethically, from the most traditional to the most innovative. The key is to choose one that corresponds both to your values, your risk profile, and your financial goals.

Thematic Funds and ETFs: The Traditional Path

One of the most common ways to direct your savings is through investment funds or ETFs (Exchange Traded Funds) specialized in impactful themes. These financial products gather stocks or bonds from dozens of companies active in a given sector.

ETFs have the advantage of being transparent (they replicate a precise stock market index) and usually have lower fees than actively managed funds.

Here are some examples of popular themes:

Tax-Advantaged Wrappers for Responsible Investing

To optimize your ethical investments, you can use tax-advantaged wrappers that offer long-term benefits.

1. SRI Life Insurance: This is the preferred investment for French people due to its flexibility. Many contracts now offer units of account (UC) labeled SRI or Greenfin, allowing you to diversify your ethical investments while benefiting from favorable taxation after 8 years.
2. SRI Retirement Savings Plan (PER): Ideal for preparing your future while supporting sustainable projects. Contributions to a PER can be deducted from your taxable income, which is a significant tax advantage.

Alternative Investments: Investing Directly in the Real Economy

If you want to move away from traditional financial markets and have a more direct and tangible impact, many solutions exist. This is called "short-circuit investment."

• Sustainable Crowdfunding (Participatory Financing): Online platforms allow you to lend money or invest directly in specific projects (solar parks, organic farms, soft mobility, etc.). You know exactly what you are financing, and the returns are often attractive, though the risk is higher.
• Solidarity Real Estate Firms and Sustainable Real Estate Investment Companies (SCI): These structures invest in real estate with an impact objective: rehabilitation of brownfields, conversion of offices into housing, energy renovation, or purchase of agricultural land to install young farmers practicing agroecology (as proposed by FEVE).
• Cooperatives: By buying shares of cooperatives like Enercoop (green energy) or Citiz (car sharing), you become a co-owner and directly support their development.
• Green Savings Accounts: Some providers offer savings accounts whose funds are 100% allocated to financing ecological projects, such as energy renovation of buildings in France. It is an excellent option for your emergency savings.
• New Actors in Climate Finance: Financial innovation now allows acting directly on the climate. At Homaio, we give you access to a powerful lever until now reserved for experts: carbon quotas. The principle is simple: by buying quotas on the regulated market, you remove them from circulation, thereby preventing industries from using them to pollute. It is a concrete way to contribute to decarbonization while making a potentially performing financial investment.

Ethical Investing and Profitability: A Winning Duo?

The widespread belief that ethical investing comes at the expense of financial performance is persistent. Yet facts and studies prove the opposite. Investing in line with your values is not a sacrifice but often a profitable long-term strategy.

Studies have shown that over 3, 5, and 10 years, funds integrating ESG criteria have, on average, outperformed their traditional equivalents. This trend is explained by several factors: responsible companies are often more innovative, better prepared for upcoming regulatory and environmental challenges, and benefit from better risk management.

Moreover, many financial players are now convinced that the most resilient companies facing future crises will be those that best integrate extra-financial issues. Some ethical investments can also benefit from advantageous tax schemes (tax reductions through SME investment schemes, capital gains exemptions for PEA, etc.), further improving their net returns.

How to Choose Your Ethical Investment Wisely? Key Criteria

Not all products that wear the adjective "sustainable" truly are. To avoid greenwashing and make a truly coherent choice, it is crucial to adopt a critical approach and analyze several points.

Decoding the Investment Strategy

Behind each fund lies a method for selecting companies. Understanding this method is the first step to know whether it fits your definition of ethics.

• "Best-in-class" Method: This consists of selecting, within each sector (including the most polluting), the companies with the best ESG scores. This approach favors diversification but might lead you to invest in an oil company simply because it is "less bad" than its competitors.
• "Best-in-universe" Method: This method selects the best-rated companies on ESG criteria, regardless of sector. This approach is often more demanding and aligned with strong values, but may lead to concentration in certain sectors (technology, health) at the expense of others.
• "Best-effort" Method: It privileges companies that show the greatest improvement in their ESG rating. The idea is to encourage progress, but this could mean investing in companies starting from far behind.

Analyze Transparency and Measure Real Impact

A true ethical investment must be transparent. You should be able to easily answer these questions:

• What is the detailed composition of the portfolio?
• What are the selection and exclusion criteria (for example, exclusion of tobacco, weapons, fossil fuels)?
• How is impact measured and reported? Are there concrete indicators (tons of CO2 avoided, number of jobs created, etc.)?

Demand this clarity. This is a commitment we make at Homaio: on your dashboard, you follow in real time not only your financial performance but also your environmental impact measured in tons of CO2 withdrawn from the market.

What Are the Risks of Ethical Investments?

Investing always carries some risk, and ethical investments are no exception. It is crucial to know them before committing.

The classic risks apply:

• Capital Loss Risk: The value of your investment may decrease, and you may lose all or part of your initial investment.
• Liquidity Risk: For investments in unlisted companies (crowdfunding, real estate firms, cooperatives), it may be difficult to resell your shares quickly if you need to recover your money. The investment horizon is often several years.
• Non-Payment Risk: If you lend money (via bonds or crowdfunding), there is a risk that the company cannot repay you or pay interest.

However, it is important to note that ethical investments help reduce exposure to other types of risks increasingly weighing on traditional finance. By avoiding the most controversial or polluting sectors, you protect yourself against "transition risks": new regulations, carbon taxes, changes in consumer demand, or reputational damage. Is investing in fossil fuels today really less risky than investing in decarbonization?

Ultimately, ethical investing is not a passing trend but a profound transformation of finance. It is the recognition that performance can no longer be disconnected from impact. As a saver, you have a crucial role to play. By demanding transparency, asking the right questions, and choosing investments aligned with your values, you are not only managing your wealth: you are voting for the world you want to see emerge. It is a demanding approach, but incredibly rewarding.

What Are the Best Ethical Investments in 2025?

There is no single answer, because the "best" investment depends entirely on your personal goals, risk tolerance, and convictions. For a beginner seeking diversification, a thematic ETF (water, renewable energy) within a life insurance contract can be an excellent starting point. For an investor seeking a direct and tangible impact, crowdfunding or investment in a solidarity real estate firm will be more appropriate. For those wanting to tackle climate challenges with a powerful market mechanism, investing in carbon quotas via a platform like Homaio is an innovative option with strong impact potential.

How to Start Investing Ethically with a Small Budget?

Ethical investing is not reserved for the wealthiest. Many solutions are accessible with small amounts. You can open a life insurance contract or a PER with a few hundred euros and set up monthly payments of €50 or €100. Sustainable crowdfunding platforms often allow investments starting at €100 or less. Finally, green savings accounts are accessible from a few dozen euros and allow your emergency savings to work for you.

Is a Labeled Investment Necessarily Ethical?

No, not necessarily. A label (SRI, Greenfin, Finansol) is a good starting point and an indication that the fund manager has reflected on extra-financial issues. However, label criteria may be more or less strict and may not correspond to your own ethical criteria. As we have seen, some labels do not exclude controversial sectors. Consider labels as a first filter but never dispense with a deeper analysis of the fund’s strategy and portfolio composition. The key remains your own judgment, based on transparent information.