If you read the papers on a regular basis, you’d be forgiven for thinking the words ‘ethical’, ‘bank’ and ‘investment’ don’t really go together – but you’d be wrong.
There is a growing desire among investors to stake their money on companies which demonstrate a high level of ethical and moral behaviour throughout their business practices. The past few years have seen a number of ethical investment funds become established.
Fund managers for Ethical Investment Funds will look mainly at three types of criteria, relating to the environment, human welfare and sustainability. Every potential investment will be weighed against these criteria and matched against the Fund’s defined ethical policy. Failure to comply will see a business disregarded as a potential investment.
As the decision to create an ethical investment portfolio is usually personally motivated, it is of crucial importance to find a fund manager who shares your ethics and intentions. The ethical policy adopted varies from fund to fund, so in-depth research is vital to make sure your fund manager is placing your money where you wish it to be invested.
Some funds practise positive screening – working only with companies who actively promote best practice in regard to the natural, social and economic environment. Other funds will work via a negative screening system. These funds only exclude companies deemed to be ‘bad’, such as tobacco or arms manufacturers, but will invest in companies who are not actively improving their environment.