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Investing by values

02 November 2010 / by Paul Dicken

Ever wondered what ethical investment actually is, what the options are and if you can invest to match your values?

Next week is National Ethical Investment Week (NEIW) and it’s probably as good a time as any to see exactly what the sector has to offer.

NEIW is co-ordinated by the UK Sustainable Investment Forum (UKSIF) and this year is sponsored by The Co-operative Financial Services and Ecclesiastical the insurer and investment manager.

Now in its third year, ethical investment week has gone from strength to strength with a growing number of supporting organisations – now 85 – and new locations, such as Leeds and Dublin playing host to events.

Chief executive of UKSIF Penny Shepherd said: “It’s a collective campaign to let everybody know they can make money and make a difference with their investments and other financial services.”

A report published in October by the European Sustainable Investment Forum (Eurosif) looking at the sustainable investment market in Europe described the UK as having as a leader in this area, with a ‘dynamic cluster of sustainable and responsible investment expertise’ across a range of institutions.

Comparing Investment Management Association (IMA) figures for assets under management in the UK as a whole between 2007 and 2009, the overall figure remained broadly static at £3.4trillion while socially responsible investment (SRI) grew by 19 per cent.

At the end of 2009, £938.9billion was managed in SRI investments in the UK. Across Europe as a whole the amount of money being invested under a broad definition of SRI grew by 87 per cent from 2007 to 2009, with six more countries now included in the study.

A mainstream concern

Although the growth in ethical or socially responsible investing has been driven by institutional investors, there is increasing interest from individuals in knowing where their money is being invested.

Shepherd said the area has grown alongside the boom in the general ethical consumer movement.

“In the same way that most of us drink Fairtrade coffee, at least some of the time, about 20 years ago most people didn’t. Ethical investment is now being used by a much wider range of people.”

She said ‘generational change’ was contributing to the sector’s growth, with investors in their 30s and 40’s moving into a stage of life where they are starting to invest with a greater general awareness of issues like ‘climate change and resource scarcity’.

As a dynamic and growing field, the development of new products has helped explode some of the myths around ethical investment. For example, this area of fund management is not simply about investing in small growth companies or exclusion strategies.

Thematic investments are available, as well as fixed interest options.

For example, the Jupiter Ecology Fund, launched in 1988 is a growth fund which has ethical exclusions but invests in six green themes, including clean energy, water management and green transport.

Schroder’s Global Climate Change Fund takes broad thematic approach investing in companies that ‘benefit from efforts to accommodate or limit the impact of global climate change’.

Shepherd also says investors should not accept a lower level of performance, or look at average performance.

As well as different investment options there are some experienced managers in the sector now, ‘with a long track record over different market conditions.’

Raising awareness


In the run-up to NEIW, which takes place from 7-13 November, the UKSIF has produced two guides, one for churches in conjunction with the Ecumenical Council for Corporate Responsibility (ECCR) and another for independent financial advisers (IFAs).

The action guide for churches, sponsored by CCLA Investment Management, aims to make ethical investment in churches ‘as widespread as fair trade among churches and their members.’

The guide for IFAs, sponsored by Henderson Global Investors, provides practical advice for financial advisers for engaging with clients on green and ethical investment options.

Go to www.neiw.org for more information about the week.

© Fair Investment Company Ltd