Why Ethical

Ethical investment is about positive change and seeing the value of improving a company’s environmental and governance standards. It is about not only understanding sustainability but wanting to actively involve yourself in it. Today there are over 100 ethical funds available to UK investors, with geographical and asset class restrictions no longer a limitation and new investment opportunities becoming available all the time.

Norwich Based Financial Advisor Team

What is Ethical Investment?

Ethical investment is an astoundingly broad and diverse sector. Although ethical investing has been seen as restrictive in the past, the marked increase in ethical funds in recent years means that ethical investment can now cater for a diverse range of requirements. Ultimately, ethical investing is always dependent on the investor’s views. It is how you, as an individual or organisation, personally feel about an industry or practice.

Below are some of the approaches you can take to include or eliminate particular funds:

Negative Screening

This method excludes unethical activities, avoiding investment in companies that are involved in areas that include:

  • Fossil fuels/carbon
  • Fracking
  • The production, sale and trade of arms and weapons
  • Animal experimentation and intensive farming
  • Tobacco
  • Alcohol
  • Pornography
  • Companies that trade with countries which abuse human rights
  • Environmental pollution
  • Nuclear power
  • The development and use of genetically modified organisms.

Positive Screening

Some fund managers will actively seek out companies who make a positive contribution, such as:

  • Providing good working conditions and policies i.e. equal opportunities
  • Respecting animal welfare
  • Promoting organic farming
  • Involvement in community schemes i.e. public housing, public transport and healthcare
  • Demonstrating environmental initiatives i.e. pollution control and alternative energy
  • Zero/low carbon impact

Socially Responsible Investing

In addition to positive and negative screening, fund managers are increasingly using the power of investment to encourage more sustainable working practices. This is the fastest growing sector of ethical investments.

High Social Impact Investing

Impact investments are all about positive social and environmental change. The world faces a host of pressing challenges, which is why investment in sectors such as sustainable agriculture, clean technology, microfinance and affordable basic services is ideal for the ethically minded.

Inspiring investments include:

  • Shared Interest Society
  • Oikocredit
  • Triodos Renewables
  • Ethical Property Company
  • Belu

The performance of ethical funds compares very well to those without ethical screening. They may be more volatile in the short term, but there is no evidence that investing your capital in ethical markets will adversely affect your long term performance. You will have the benefit of contributing to real change, something that is for the good of all.