Ethical Financial Investment
|Friends Provident introduced the first ethical investment fund in 1984.|
|Even prior to
the FTSE4Good index there were nearly 50 ethical and socially responsible
investment funds offered by over 30 fund management groups in the UK and
in the international sectors. Now there are many and varied ethical ISAs available for investors in the UK.
Ethical criteria are important and while many funds can be broadly similar, there may be important differences in the detail. You can usually select funds which, to some extent, support your ethical views but also satisfy your financial needs for growth and profit.
Choosing appropriate criteria can be a complex problem, partly because many companies have a broadly good record but fail in some small way. We researched ethical and socially responsible investment criteria used by a number of ethical investment concerns and found how difficult it was to ensure that their criteria fitted in with ours. Believe it or not, we even found it tricky to know exactly what we wanted ourselves, so we produced some notes as a guide.
You may find its the same for you; click to see the Guide we produced on Choosing Ethical Criteria and Socially Responsible Investment.
Ethical funds have often done remarkably well with returns sometimes significantly better than those in other sectors. Through 2006 the top ten ethical and environment funds achieved annual gains between 21% and 30%. Ever increasing public awareness and interest in ethical and environmental issues such as climate change, organic foods, ethical behaviour, pollution and renewable energy has had some influence in driving investment in these areas. Renewable energy companies are good examples of commercial concerns with vast investment potential and the public are highly focused on energy supply. While cost may be a dominant feature for consumers, green credentials are also important.
Much has changed since the Friends Provident fund in 1984 and it is pleasing that some funds have given good returns. It seems that you can have the best of both worlds, being able to invest for profit while retaining ethical standards.
What about the FTSE4Good Index? A Good question, but we don't have a good answer yet. This new index was introduced early in July, 2001 in an atmosphere of controversy. The aim was to provide a datum for ethical investors but as we explain above, we do not believe that the criteria are universally accepted (see the Reference Guide above).
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Page originated: 7 November, 2001 Last updated: 8 May, 2013