A Background
More and more people are taking an interest in green and ethical issues, covering subjects as diverse as environmental improvement, climate change, genetically modified foods, gambling and the destruction of rain forests. Nowadays, you can choose to actively support or avoid these causes through every day activities such as buying organic food, donating to particular charities or using recycled products. There are also increasing opportunities to make ethical choices when it comes to your finances.If you are worried that the companies in which you invest might be exploiting Third World countries or damaging the environment, or if you have concerns that you may be supporting company activities that you do not approve of, you may be interested in Ethical Investment (also known as Socially Responsible Investment).
The type of screening used by the Fund Manager will be very important to you if you are particularly concerned about certain issues. You may wish to support certain companies that you feel are making a positive effort to be ‘green’, while avoiding those involved in activities that you do not agree with. Positive and negative screening will help you make your investment choice.
What Do You Want From Your Investment?
Different people have different principles and not all ethical investment funds have the same objectives. Some look to invest in companies that make a positive contribution, while others specifically avoid certain companies. Ethical investors may avoid companies involved in activities believed to be harmful, such as tobacco production and pornography, whilst others may wish to support companies which make positive contributions to society, by being environmentally friendly, for example. There are also ethical investment strategies which try to balance both the avoidance of some activities whilst pro-actively supporting others.There are Ethical Funds that go further still by using shareholder pressure to bring about changes in company policy. By joining forces with other investors some Ethical Funds have successfully influenced several companies to change their practices.
Ethical Investment Funds use a screening process to ensure that the companies they invest in are the right ones to meet their ethical policy. The screening will remove companies considered to be ‘negative’ and will encourage investment in ‘positive’ companies.
The type of screening used by the Fund Manager will be very important to you if you are particularly concerned about certain issues. You may wish to support certain companies that you feel are making a positive effort to be ‘green’, while avoiding those involved in activities that you do not agree with. Positive and negative screening will help you make your investment choice.