Boost in renewable energies favours Ethical Funds

Demand for ethical funds investments may be boosted this week with the news that renewable energies are now contributing over 10% of all energy consumption in Europe*.

This figure is set to rise further, continuing to boost ethical funds investments as we proceed through the next decade. Following the 2009 Directive on Renewable Energy, which set targets for using renewable energies for all EU member states, the EU has pledged to take 20% of all its energy from renewable sources by 2020.

Individual consumptions of renewables vary wildly, however, ranging from Sweden, which takes 44% of its energy from renewables, to the lowest consumers Netherlands (3.2%), UK (2.2%), and lowest of all Malta (0.2%).

UK investors can now vote positively to support the use of renewable energies by investing in ethical funds.  Funds such as the Jupiter Ecology Fund seek out and support companies which have a positive impact on the environment, and Jupiter features renewable energies prominently in its portfolio.

According to the latest available figures, at 31 December 2008 there was approximately £6.8 billion invested in Britain’s green and ethical retail funds. This estimate is based on 81 UK domiciled green and ethical retail funds. It does not include UK money invested in ethical funds domiciled outside of the UK, or in off-shore funds.

Ethical funds can use ’positive screening’ to include companies that are strongly pro-environment. These include companies which manufacture environmental products, encourage biodiversity, or promote renewable energies.

Other ethical funds use ‘negative screening’ to exclude companies involved in various ‘unethical’ industrial sectors such as tobacco, alcohol, meat, nuclear power, defence, or intensive farming. Activities that can be avoided include deforestation, exploitation of workers, or animal testing.

The negative screening approach was the ethical policy behind the PAX fund, the world’s first ethical fund set up in 1971 to enable investors to avoid all companies benefiting from the Vietnam War.

*Source: European statistics office Eurostat