Q: What is an ethical investment?
Ethical, or ‘socially responsible’ investment is about aligning your personal beliefs regarding environmental, social and ethical concerns with your financial objectives.
It basically allows you to invest in a socially responsible way, without having to compromise your principles and moral stance.
This can be as simple as avoiding companies which engage in activities you wouldn’t want to support, or investing in those which operate within a framework which you agree with.
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This is known as screening out and screening in (or negative screening and positive screening).
Screening out is where you automatically exclude companies from consideration due to the nature of their business, such as tobacco firms, gambling enterprises, or companies investing in arms manufacture or nuclear energy.
Positive screening is where you choose to support companies that have positive social and environmental policies in place, such as renewable energy, carbon offsetting or sustainable timber.
According to the Ethical Investment Research Service (EIRIS), the non-profit sustainable investment research firm, the amount of money invested in Britain’s green and ethical retails funds has recently reached a record height of £11.3bn.
And over the last decade, the number of ethical investors has tripled, from 250,000 to three-quarters of a million.
Today’s ethical funds also offer a more positive approach to investing and offer a chance to benefit from tomorrow’s investment themes around sustainability, according to Mark Robertson, head of communications at the Ethical Investment Research Service.