Enforcing such contracts will involve transaction costs (often referred to as agency costs), and these costs may sometimes be very high indeed.The more autonomy that agents have to have in order to do their particular kind of work effectively and efficiently, the less useful coercive sanctions are likely to be, and the more important it becomes for agents’ moral and material incentives to be appropriately aligned with their broader obligations to their principals. That is, organizations need to be structured in such a way so the agent will expect that diligently serving the interests of his or her principals will also be in his or her own long-run best interests. In order to accomplish this, the principals need to be reasonably clever in setting up the initial rules of the game that are set in the employment contract, sufficiently vigilant in keeping track of their agents quality of performance over time, and willing to bear at least some minimum level of agency costs in order to provide the necessary incentivesThere are many definitions for the term ethical investment, and what this term entails. Ritsie Lowry, maintainer of the GoodMoney site1 suggests that In one sense, ethical investment is just like a traditional investment. Ethical investors pursue the same economic goals as all investors: capital gains, higher income, and/or preservation of capital for future needs. However, ethical investors want one additional thing. They don’t want their investments going for things that cause harm to the social or physical environments, and they do want their investments to support needed and life-supportive goods and services. From this certain definition, we are able to realize that ethical investment is similar to the conventional investment, but differs from the fact that it needs one more requirement. Ethical Investors are very strict as far as the kind of business their money is going to fund.Many kinds of research have proved that ethical investors prefer to invest their money ethically although they know beforehand that the investment will not be as lucrative as a traditional investment.