Ethical investments have been possible in the UK since the launch of the first ethical fund way back in 1974 – but to date, only 8% of us have actually taken the plunge and put our money where our principles are.
The problem with ethical investment is that it is on a sliding scale – from light green investments to the more strict dark green investments, and all shades in between.
Ask yourself the question – how ethical am I?
The first step is to find out how ethical you personally want to be. Some investors wishing to make ethical investments still like to see an element of the oil and gas industry in their portfolios, as this is a driver of growth. They accept a fund which has an ethical flavour to it, but is at the mainstream end of ethical – and so the light green ethical funds sector was born.
If you accept nuclear power as less pollutant than fossil fuels, and you accept the claims that the oil and gas companies spend fortunes researching renewable energies, your personal ethical criteria may be less strict than other investors.
It is simply a matter of defining where you stand, on that sliding scale from light to dark green.
What are the choices at the dark green end?
Down at the dark green end of ethical, there are funds which very strictly invest only in companies providing products or services in the areas of water and natural resources, waste management, alternative energy, or fair trade.
In addition, some funds expect their holdings to go even further by demonstrating that they put something back into the communities in which they operate. This may involve providing housing for workers, free healthcare, even building schools and improving the social infrastructure of developing communities.
Where is the information I need to find the right ethical investments for me?
With nearly 100 ethical investments now available in the UK, provided by over 40 investment companies, there is more information to be sifted than any single investor can manage on their own.
The best first step is to take quality advice from an independent financial adviser, who can ‘lift the lid’ on any ethical fund, and rummage around inside, to check on the holdings it contains. This is the best way to find where the various ethical investments stand, on the light – dark green scale.