Ethical Investment
Ethical investment combines the social or environmental considerations of the investor
with their financial objectives. It can be found throughout the industry, in the
form of Unit Trusts, Investment Trusts, pensions and savings schemes, and is growing
at an impressive rate. Traditional ethical funds are involved with a positive and
negative selection process, where money is invested in companies that make a positive
contribution to the world and withheld from companies that do not. This strict screening
method has perhaps fuelled the idea that ethical funds have been unable to compete
with their non-ethical counterparts in terms of performance, but it is not true
to say that following your conscience will mean poor performance and ultimately
poor returns on your investment.
The first ethical fund was launched in 1984 and there are now around 50 retail ethical
funds in the UK. Further interest in the sector can be seen in the Ethical Investment
Research Service (EIRIS) figures, which state that the ethical funds industry totalled
£4 billion in August 2001. Along with the obvious growth of ethical investment products
in the market, the Government has also started to pay serious attention to the ethical
issue by the recent introduction of new pension regulation. The developments in
the ethical sector suggests that we are changing the way in which we make our investment
decisions, thinking more about our influence as shareholders.
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