Ethical Investments

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Ethical Investments

Ethical investment means choosing to invest your money in companies that act in a socially responsible way.

For example, a company that manufactures cigarettes or armaments or whose factories pollute the environment would not be candidates for ethical investors' funds.

On the other hand companies that use environmentally friendly manufacturing processes and support fair trade practices would be likely to attract ethical investors.

Identifying individual companies that behave in an ethical way is tricky and time consuming, however one way to get there quicker is to look at the companies that make up the FTSE4Good indices. FTSE has for example identified 47 companies that meet human rights criteria and 266 that have improved their environmental practices.

Compare Ethical ISAs

With the new cash limit at £5,100 - now's a good time to grab an ISA.

	Virgin Climate Change ISA An environmental fund with potential for outstanding profit growth without destroying the planet.
	Legal & General ISA Legal & General offer a wide variety of ISAs from Index tracker ISA's to Multi Manager ISAs. 50% refund on some management fees.
	TD Waterhouse - Stocks and Shares ISA Voted best online broker 2007. Offering self select ISA's with a choice of over 1,800 unit trusts, with 0% administration fee.

Why ethical funds?

Many investors prefer to invest in ethical funds that do the research work for you rather analyse the individual companies.

The fund managers choose the companies to invest their clients' funds in and explain why they have chosen them. The funds can be for example ethical pension funds, ethical insurance funds or ethical ISA funds.

Typically fund managers will use three broad criteria to select the companies they invest in:

• Humanist - where companies behave in a moral way, for example in not dealing with oppressive regimes, are not involved with armaments, tobacco, alcohol, pornography or gambling.
• Animal welfare - a fund would not invest in companies that carry out tests on animals.
• The Environment - a fund would screen companies for good environmental practices and leave out those that behaved irresponsibly.

The goal in choosing to invest ethically is to achieve acceptable investment returns and to support businesses that make a positive contribution to society.