Today’s blog has been written by Kayleigh Alexandra from Micro Startups. For more information, visit: microstarups.org

Due to changing attitudes and the relentless visibility of the internet, the days of quietly bringing ethically-questionable investment deals to fruition have passed. We’ve moved into an era of responsible business. Any business leader who wishes to maintain a positive reputation must be extremely wary of the long-term consequences of their actions.

This is particularly significant in the retail world because it’s a source of great concern for many shoppers. People want to keep spending, but are also worried about the impact of consumerism on the environment (as well as the prospects of small communities).

Because it’s both the smart option and the ethical option, then, companies interested in getting involved in the retail world should commit to socially responsible retail investment. What exactly does that mean? Here’s what you need to know:

It’s about supporting sustainability

Socially responsible investment in general involves caring about the consequences of your investments — looking past straightforward ROI to think about the likely social repercussions of the companies you’re backing achieving long-term success.

Socially responsible retail investment deserves identification as a specific pursuit because of the size and significance of the retail industry. More than ever before, shoppers are looking closely at how the brands they support behave: do they care about how their products are sourced? Do they seek to help their communities? Do they back significant causes outside of their fields?

Whether you’re looking to invest in a retail business, or endeavoring to enter the retail world directly, supporting sustainability is mission-critical. Not only is it vital for the environment, but it’s also key for driving sales through gaining customer loyalty — so while it will likely incur additional cost to go green, it will inevitably prove worthwhile.

Look at a company like Kowtow, a fashion retailer that uses eco-friendly materials, maintains a transparent supply chain, pays a living wage, and avoids animal products. Because of its ethical operations, it consistently elicits positive responses from shoppers willing to pay more to encourage sustainable business.

It’s needed to balance ecommerce growth

Regular retail has its problems with inefficiency (stock being needlessly shipped from location to location, for instance), but when retail is kept in the hands of relatively few large companies, efficiency improvements are easier to achieve. The ecommerce revolution of recent years, however, has led to a paradigm shift.

Today, any seller with ambition can use enterprise-level tech (e.g. a platform like Shopify Plus) to scale at a rate that would have been considered impossible just a decade ago. This is a great thing for entrepreneurs, giving opportunities to those who would traditionally have lacked the necessary resources, but it also adds chaos and uses a lot of electricity.

Consequently, if we’re to enjoy this era of retail diversification (a great thing on the whole), we need organizational responsibility more than ever before: efficient supply chains, minimal waste (supported by companies like Good Natured Products Inc.), fair prices, and green energy underpinning the online infrastructure.

It requires careful investigation

Perhaps the core problem with socially responsible retail investment is that a company can talk a good game about ethical operation but never actually deliver. If you prefer hands-off investments, you might want to simply pick a promising company and let it make good use of your money — but that isn’t advisable. If you truly want to encourage good practices, you’ll need to stay involved (at least for long enough to confirm that meaningful action is being taken).

Do your research, speak to everyone involved, and consider your gut instinct about a prospective investment. If you truly believe that a company has good intentions, then you’re probably correct. Of course, the road to hell is paved with good intentions, so that isn’t enough. It’s the results that matter. As an investor, you have leverage — and you need to use it.

To recap, then, socially responsible retail investment is about taking action to encourage and support retail that’s sustainable, fair, and good for society. Given the growth of the online retail world, it’s needed now more than ever before — so if you care about ethical business, you need to ensure that your investments become net posit

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