For those who want to invest their money in an ethical way, there are many more options than there used to be, and a lot of these options are producing healthy returns. In many cases, ethical funds have outperformed their mainstream counterparts, which shows that profit and principles can go hand in hand.
The natural state of mind for anyone who wants to add an ethical dimension to their financial dealings is to assume that whatever they do is unlikely to make any difference. That may be true that your individual action won’t change anything by itself. Finding an ethical investment fund won’t feed millions of starving people, nor will your ethical investment affect climate change.
There are however signs that the world is beginning to sit up and take notice of the social and environmental issues that have always haunted us but largely been ignored for decades. It looks like we are on the verge of becoming socially responsible. About time.
1: You can have your say: By investing ethically, you can have your say in the issues that matter to you. We have all seen what irresponsible company behaviour can do to us personally, to our communities, markets and environment. Through these vehicles you now have a powerful way to have your say in these matters. Today’s variety of values-based investment funds means you can choose to invest in companies that are committed to doing what is right for society and the environment.
2: It makes good investment sense: Investing ethically doesn’t mean you have to compromise on returns. Quite the opposite. Companies recognise that contributing positively to employees, the community and society means that they will be better placed for future growth. Conversely, companies that pay little or no regard to their behaviour are at risk of harming their reputation and ability to generate long term investor returns.
3: You can make a difference: Many people today are investors through contracts such as pensions or lump sum investments such as ISA’s. But how many of us really know how and where our money is being invested? Do we care? Socially responsible investing allows you to invest in a responsible way, without compromising your beliefs and principles. The more of us do this, the bigger the impact.
4: You have lots of options: Today, there is lots of choice available when it comes to finding a fund that follows values-based criteria. Some are called ethical or green funds whilst others are classified as socially responsible investments (SRI) or sustainable funds. Some screen companies out based on specified criteria whilst others use set criteria screen companies in. There are managed funds and there are low cost trackers. All ethical funds are completely transparent so it is easy to see which companies they are investing in.
5: You can get good returns: Generally speaking, ethical investment funds aim to maximise long term returns balanced with concern and respect for wider social issues. In general, companies that go about things the right way are more sustainable. That reads to me as being in a positive place to do well and be profitable over the long term. What could possibly be better than getting a good return whilst having a clean conscience?
An increase in demand for ethical funds from 2008 to 2017 of 500 percent shows that confidence is growing in this sector. If this trend continues, ethical investing could soon become the mainstream. The tide is turning and we can all make a difference.
