Ethicality is the same as morality; therefore, ethicality is portrayed by the actions you take in an attempt to live up to your highest ethical ideals. Ethics is a broad concept, as different people have different perceptions of what they consider moral. It is usual to find out that your ethical principles do not necessarily match the ethical values of the other person.
Some widely acknowledged ethical conducts and principles are fairness, honesty, diligence, respect, and care for others. However, a standard rule cuts across various philosophies and major religions and could be very applicable in defining ethicality; the golden rule states we should treat others the same way we would like to be treated.
Why Ethicality Is Important to Investors
Promotes Capital Market Sustainability
Adherence to ethical principles among the investors enables them to have a sound knowledge of the indirect implications of their actions to the broader community. Therefore, when investors define ethicality primarily based on the golden rule, they can understand how global finance is interconnected.
In that way, they can consider the sustainability of markets which has long been ignored over the years. If investors adhere to the highest standards of ethical behavior, they will ensure the long-term sustainability of the market.
Ensures Legal Behavior Among Investors
Many legal regulations are compatible with ethical behavior; if investors conduct their business appropriately, they are more likely to abide by the law; like laws, ethical principles constrain individuals from pursuing narrow self-interest.
Investors who look at matters from their perspective without considering their implications on others are most likely to harm or exploit others and the environment. However, in defining ethicality, the definition goes beyond what is legally correct. But ethics can act as a legal framework, especially in places without sufficient resources to enforce regulations.
There Is Maximum Benefit to The Society
In defining ethicality and the concept of sustainability, we take care of the environmental, social, and governance issues. Therefore, the ultimate mission of ethical investors should be to foster people to live in an environmentally, politically, socially, financially, and politically stable society. And the final result of such efforts should be to promote public welfare and the well-being of every individual.
One of the main ingredients of this goal is efficient resource allocation, such that capital is allocated in areas where it is most beneficial. Such distribution would result in increased production of goods and services that are affordable to everyone, increased job opportunities, promotion of innovation, improved standards of living, and much more benefits.
Summary
Defining ethicality is similar to determining the morality of an individual. It can be clearly defined by considering their actions to live up to the highest standards of their ethical principles. Defining ethicality in terms of investments is essential in several ways.
Firstly, if investors adhere to ethical principles in their investment, they will promote capital market sustainability. Also, if investors adhere to ethical principles, they are more likely to be legally correct since most ethical principles are also lawfully right. Also, if investors embrace ethics in their investment decisions, there is the ultimate benefit to society since resources are allocated in areas that create maximum benefit to the community.