What is ethical investment?

Since we started Investing Ethically – back in 2000 – our expertise has been working with ethical funds and their managers. This enables us to support our clients, carefully aligning their investments to their ethical values.

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Understanding what matters to you

Many of our clients share broad concerns about the environment, and making the world a fairer, safer, and healthier place for us all. Some clients have more particular issues that matter to them – such as veganism, nuclear power, or avoiding certain countries. We’re not here to judge. We’ll work to understand what matters to you and explain how your money might be invested to match your values.

Lisa Hardman | Director and Chartered Financial Planner

Avoiding the negatives

‘Negative screening’ is used to exclude companies involved in harmful activities, such as:

  • The arms trade
  • Fossil fuels and fracking
  • Alcohol
  • Tobacco
  • Pornography
  • High-interest lending
  • Mining
  • Animal testing (cosmetics and/or pharmaceuticals)
  • Operations in oppressive regimes

Targeting the positives

‘Positive screening’ is used to identify companies whose activities make a positive difference, with themes such as:

  • Healthcare and healthy lifestyles
  • Education
  • Water management
  • Renewable energy
  • Greener transport
  • The ‘circular economy’

 

Engaging for change

Ethical funds often look to hold company shares for the medium-to-long term, building relationships, rather than acting as short-term traders. Ethical investments can therefore help to drive change in areas such as:

  • Carbon footprint
  • Biodiversity impacts
  • Modern slavery
  • Indigenous rights
  • Diversity, equity, inclusion
  • Tackling health challenges

Engagement is an important way for fund managers to assess risks, to encourage change, and to improve quality and ‘shareholder value’. Approaches include ongoing meetings, setting targets for improvement, filing resolutions, voting at company meetings and – potentially – divesting from (selling) companies unresponsive to change.

Staying aligned with your ethics and values

Working together we will explore ideas and possibilities, making sure we stay aligned with your ethics and values.

Working with ethical funds

For most of our clients, their financial plans will include investments – such as pensions or general investments. Clients do not normally buy directly into company shares. Instead, investments are made into ‘funds’, run by fund managers. For ethical funds, companies are selected not just on the basis of their financial performance, but also for meeting the fund’s defined ethical criteria. In simple terms, ethical investments will analyse both what a company does and how the company operates.

Andy Hockaday | Director and Chartered Financial Planner

Learn more about the big issues

We regularly publish articles about topical issues and the options available to ethical investors. Let us know what you think!

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