Simple guide ethical investing
A quick beginners guide, covering the what, when, why, how and where of ethical investing
What is ethical investing? Put simply, saving or investing money with due regard to your values – be they ethical, environmental, social or religious. Traditionally it was based on a screening process which looked to avoid companies whose activities were viewed as negative (e.g. animal testing, tobacco, weapons). Over time it has developed into both positive screening (e.g. renewable energy or healthcare) and a mechanism to put pressure on companies to be more 'socially responsible' (you may have heard the term ‘SRI’).
When did it start? Friends Provident (where I started my long career in Financial Services) is often credited as the pioneer of ethical investing in the UK. Founded by the Quakers, it developed a Stewardship fund, drawing on its religious roots. The Stewardship brand remains strong today - Friends Provident does not, sadly :-( A plethora of ethical and SRI collective investment funds exist today and the degree to which companies’ activities are scrutinised varies.
Why chose to invest ethically? The objective of every investor may be to make a profit, it does not have to be at the expense of fellow humans, animals, or our planet. To make decent returns on one's savings or investment, whilst encouraging a force for good, is arguably the best of both worlds. For some investors, their religious beliefs may dictate matters.
How do I invest ethically? Individuals in the UK who are saving for their future, perhaps a specific event (first home, or children's university, perhaps) can choose for their money to be invested ethically (using ISAs, for example). As can those either saving for retirement (using a pension) or drawing an income from their savings whilst in retirement. Lump sum investments, like bonds, can also be ethical. Companies, charities and clubs often choose to invest their funds in an ethical manner too.
Where do I start?
Professional advice from an expert (like me, nudge nudge) is a good idea, not just to find a best-in-class fund, which matches your values, but also to limit investment risk to what you're comfortable with. If you are confident dealing with your own finances, perhaps start by contacting your current providers to ask what ethical funds they can offer you.
Disclaimer: The information in this blog / website is for guidance only and should not be viewed as advice nor a personal recommendation to invest.