What Is Ethical Investment?

For those of us who try to look at investment with a conscience, ethical investment is possible via a number of collective funds or individial stocks.

Back in the eighteenth and nineteenth centuries, religious organisations were the first to use morals to help make investment decisions. In those days, the aim was simply to avoid involvement with companies whose products were not approved of - alcohol and gambling for example.

It took a long time for ethical investment to reach the average investor. For example, the first of such funds in the United Kingdom were introduced in 1984. Since that time, the use of a moral compass to guide investment decisions has evolved to include ever more complicated strategies and wider ranges of companies. The ideas of socially and environmentally responsible investment have also been developed. This means that some investments are favoured for being acceptable, whilst others are excluded for being less agreeable. The idea of active engagement within companies has also been developed.

The advanced levels of analysis in this area means that most 'investors with a heart' are better using a collective investment fund which specialises in the subject or simply following their lead. It is almost certainly enough for most investors to focus on picking profitable companies for investment, without needing to then filter for environmental policy or charitable work.

Most ethical funds will employ some form of advisory board to help formulate their ethical policies. By doing this, the fund manager removes much responsibility from themselves for their policies and therefore are only responsible for actual investment returns.

These committees will be responsible for such things as:

- deciding upon any selection criteria

- making sure that the fund and fund managers comply with their stated policies

- screening companies the fund may select from

It needs to be said that this area will not be applicable to everyone. Your author, for example, is a very enthusiastic recycler and explains the impact of global warming and climate change to anyone who seems to not understand. And yet, I still find it very difficult to invest with morals - I just want to make a profit!