Are you part of the growing army of investors wanting to save the world from global warming and invest in enterprise that benefits the Third World ? If so the choices are not straightforward even though the ethical investment sector is growing exponentially, international legislation is forcing old industries to adapt and creating opportunities for new ones.
Over the last six or seven months, for example, a number of climate change funds have been launched but not all are driven by the same ethical priorities.
Some choose to invest in nuclear power because, it is argued, this will help to cut CO2 emissions and that worries over radioactive waste can be resolved at a later date. There is also a growing fashion for investing in green energy such as windpower and solar panels - even though others argue that output has to be heavily subsidised and some of the technology does not save as much CO2 as it takes to manufacture.
Although not widely known the FTSE4Good index appeals to a broad range of institutional and socially responsible investors who are looking to:
- Only invest in companies that demonstrate good standards in corporate responsibility.
- Minimise the social, ethical and environmental risks within their portfolios.
Criteria are applied to the FTSE Developed Index Series, which covers 23 markets and more than 2,000 potential constituents. However, its guidelines do not cover all the principles of socially responsible investment.
Unique ethical fund comparison tool
That is why Hargreaves Lansdown has developed a unique comparison tool that enables investors to fine tune how ethical they want their investments to be.
Use this ethical investment fund comparison tool here
You can green up your investments at no extra cost using our search engine. It will show you a shortlist of funds and you can click to see each fund's stated ethical policy. There are positive and negative criteria and you can search on any mix. Bear in mind, however, that not all funds apply both techniques.
Act soon and there is still time to claim your ISA and SIPP allowances before the end of the financial year - with the double advantage of making them ethical.
There are different levels of risk for different investors in a range of sectors. You don't just go out and buy an ethical fund - there are UK ethical funds, European funds, bond funds, even Asian ethical funds.
Matching your performance and ethical objectives
Like any other area of fund management performance can be mixed. Just as there is a variety of funds, performance is also mixed. Investing in a fund that upholds your principles is important but ultimately we all want to see a return on our investments. You need to invest with a fund manager who has the ability to outperform over the longer term.
Although we do not give investment advice we have selected three funds we believe are worthy of consideration if they match your ethical objectives. Aegon Ethical Equity, F&C Stewardship Income and Jupiter Ecology are all included in the Wealth 150, a list of our favourite funds in each sector. Ultimately, of course, the choice is entirely yours.
