There are three broad approaches to ethical investment, the best funds tend to combine all three.
Negative
This might include avoiding those companies involved in areas such as:
- The arms trade
- Nuclear power/fuel
- Repressive regimes
- The tobacco industry
- Anti-trades union activity
- Animal experimentation
- Third World debt/exploitation
Positive
Where fund managers will actively seek to invest in companies whose products or services are of long-term benefit to the communities in which they operate and/or contribute to a better environment, might include:
- A good safety record
- Openness about activities
- Pollution control
- Energy conservation
- Production of recycling equipment
- Equal Opportunities Policy
Dialogue and Engagement
This encourages more responsible business standards, when there is a strong business case for change . This approach can be done separately to or in combination with screening. Fund managers will engage on areas such as
- Inappropriate remuneration
- Social responsibility
- Climate change
Whichever combination of approaches you decide to take, it is important to get independent advice from a qualified, ethical Independent Financial Adviser such as The GÆIA Partnership.
It makes financial sense as well as moral sense to invest in companies which are planning ahead to create a better environment.