Ethical Matters - How to put your money where your heart is -
A Guide to Ethical Investment
Ethical, or socially responsible investment is something most people agree with, since making a profit at any cost is both morally questionable and environmentally unsustainable. We do not want our financial gain to be at the expense of other people, animals or the environment.
Unfortunately, unless we have deliberately chosen an ethical option for our money, we are likely to be investing in companies whose products and services we may disagree with. These investments may be directly in shares, but may also be in pension funds, life assurance, or endowment mortgages.
These schemes often take little account of the investor’s moral and ethical values, as their primary concern is financial gain.
The first ethical trust in the UK was launched in 1984 and there are now over 50 ethical funds to choose from. Investing in an ethical and socially responsible way is now acknowledged as a sound medium to long term strategy. Ethical investment allows people to choose investments that reflect their beliefs and principles
Ethical Criteria
Positive criteria, for companies in which an ethical fund manager will actively seek to invest, include equal opportunites and ethical employment practices, animal rights, environmental protection, and fair trade. Negative criteria, for companies in which an ethical fund will avoid an investment, include any involement in the Arms Trade, pornography, tobacco, poor employment practice, exploitation of the developing world, gambling, or support for oppressive regimes.
If enough people are converted to socially responsible investing (SRI), it is hoped that companies will eventually be forced to review their policies and become more socially responsible. If they fail to do so they will face a fall in their share price or a loss of confidence in their company. Socially responsible investment funds generally fall into one of two categories - ethical or environmental.
It is now accepted that SRI is a way of achieving a good return on your investment while helping build a better world. in a speech to the Social Investment Forum, John Denham MP (then Parliamentary Under Secretary of State for Social Security) confirmed that "research currently underway in this field appears to suggest that ethical funds have performed better than other alternative investment approaches". |
