Ethical Investment / Socially Responsible Investing
“Ethical Investments in our opinion have a real opportunity for growth in the medium term, if you are invested in truely ethical investment funds, be wary of those investment funds that market themselves as ethical.” Gareth Flanagan, Principle First..
At Principle First we have a strong belief that by investing in ethical investment funds, you are not only adding value to society, but could in the medium term attract more growth than some non ethically marketed investment funds. The trick is to ensure that you are in the ethical funds that will give you the best chance for growth.
We assess all the ethical funds in the market and from our research we have found that a lot of the funds portray that they are ethical funds for marketing purposes, but when you delve further you will find that they are no more ethical than many mainstream funds.
Need advice on ethical investments? Speak to our expert investment advisers on 0800 678 5929 or get investment advice online here
Since the first ethical investment fund was launched in the UK in 1974, the market has grown steadily and now features three quarters of a million investors spread over some 100 ethical funds.
Ethical or socially responsible investment (SRI) funds are accessible through a wide range of savings and investment accounts, with options for regular savers as well as larger investors. There are specialist banks dedicated to ethical and sustainable investing, and many of the mainstream banks now include ethical options within their general funds portfolio. These providers are fed by a whole industry providing screening and information that highlights companies with ethical practices – and those to be avoided.
So, what are ethical investments?
Ethical investments are those which place your funds in stocks and companies which meet various criteria relating to ethical behaviour. Various funds are available whose ethical search criteria are based on negative screening, i.e. by the activities, products and companies they exclude. These include areas such as: animal testing, deforestation, meat, nuclear power, pollution, tobacco, military and weapons, genetic engineering, exploitation of workers, and oppressive regimes.
Other funds use ethical search criteria based on positive screening, so that they support companies involved in: biodiversity, sustainable forestry, environmental products, green transport, charity work, renewable energies, and water management.
Not sure about your ethical fund choices? Talk to one of our investment advisers on 0800 678 5929 or get investment advice here
Define your own ethical investment criteria
All investments should be made on the basis of identifying your risk profile, before you invest, and ethical funds are no different. It is essential to talk to a quality financial adviser so that you can identify your risk tolerance and match that to the fund that’s right for you.
While you have already taken the decision that you would like to ‘vote with your money’ in the ethical sector, your adviser can also help you come to a more defined understanding of what you are seeking to achieve with your ethical stance. There are a number of difficult questions to be addressed. For example, if you are an environmentalist, do you view nuclear power negatively, or see it as a practical solution to global warming? Or do you oppose animal testing for medical purposes, or only in the cosmetics industry?
Another issue is that there is currently little regulation of the use of the term ‘ethical’. Many ethical funds invest freely in various sectors by identifying the ’least worst offenders’, in other words, by allowing companies which strive, within the limitations of their industry, to be good corporate citizens. Other funds argue that the large oil companies such as Total, Shell and BP are investing such large sums in researching alternative energies that they deserve inclusion in ethical funds, purely on that basis.
Get ethical investment advice from our expert investment advisers on 0800 678 5929 or get investment advice here
