October saw the 2012 National Ethical Investment Week, the fifth year that there has been a focus on investing in companies and funds whose aim is to make a positive difference to people and the environment.
To follow on from that, we’ve brought together some of the most up to date information about ethical investing, as well as a short history to put it into context. With ethical investing moving further and further into the mainstream consciousness, it’s a good time to take a look at what’s currently happening in this arena.
It might come as a surprise to learn that investing ethically or taking a ‘green’ stance on financial matters is not just a few people taking a moral stance on the fringes of investing. It has a broad popularity base, with appeal to a wide variety of investors. Over the past ten years or so, ethical investment has gathered momentum and public awareness: one of the most visible examples of this is how more and more of us are concerned about who we bank with and what our bank invests in.
The evidence of interest from investors, and a response to this interest from financial institutions, is shown by the fact that in the UK there are a number of different providers offering financial services such as banking, pensions, insurance and mortgages which have green credentials.
Green and ethical investing isn’t a new thing either, it’s been around for longer than you might have realised. As far back as 1984 the first ethically screened fund was launched in the UK retail investment market and by the end of 2011 the number of funds had grown to 132 with some £21 billion under management.
Even more compelling is the fact that ethical or sustainable investment funds are now competing strongly with more traditional investment funds and delivering strong results, so opting for an ethical fund doesn’t mean that you have to compromise on the potential for returns. On the basis that everybody invests to make a profit, then the potential to profit at the same time as investing for good is an attractive combination for many of us.
To pick one example: over the last ten years, the Ecclesiastical Amity International fund has outperformed the whole of the IMA Global sector gaining 195.54 % over that period, compared with a sector average of 106.52 % which is no mean achievement by anybody’s standards! Other good performers in the ethical and sustainable sector have been Kames Ethical Equity; CIS Sustainable Leaders Trust; Standard Life UK Ethical and Aberdeen Ethical World. (1)
So what sort of investments are available? Historically, the choice of investment funds was very specialised and relied heavily upon rigorous screening to ensure that the assets being invested in were strictly in line with the fund’s ethical objectives. From this very ‘dark green’ standpoint, things have moved on and become more flexible, meaning that investors now have a wider choice of funds. There is now an increasing emphasis on social responsibility and more recently on thematic investing in such areas as water or forestry.
Looking to the future, the global investment marketplace seems likely to continue to evolve and develop. Sustainable investing is a very serious challenge to the old adage of profit at any price and is set to grow further and make a positive difference to society whilst still offering potentially good financial returns for investors.
Finally, whatever the nature of your investments, it still holds true that wherever and however you choose to invest your capital, if you invest in equity based assets, you must always be aware of the risks involved along the way. Before setting out to invest, seek out independent advice and enlist the help of a suitably qualified and experienced independent financial adviser to guide you along the way. Your adviser will talk through all your objectives and ethical considerations and will help you plan your portfolios accordingly.
To find out more about ethical investment, call Nick McBreen free on 0800 0112825 or e-mail info@wwfp.net
The value of shares and investments can go down as well as up.
Past performance is not a guide to future performance.
Source:
1. FE Trustnet