Ethical Investment

Ethical investment is on the rise.

A glimpse into today’s financial world shows an ever increasing number of banks, investment groups, pension and mortgage providers all offering services based on ethical principles.

In the first of our guides to ethical investing, UK Investment Advice will introduce you to the origins and philosophy of this form of investment which has taken to the hearts of investors worldwide.

A Time of Ethics

Ethical Investment, also known as Socially Responsible Investment, was first initiated in the United States of America. In control of billions of dollars, church-based collectives in the USA were the first of many to wisely consider the implications of where and how their money was being invested. In the 1970s at the height of the Vietnam War, many investors chose not to invest in weapons manufacturers or dictatorships set on enforcing oppressive regimes.

Insurance firm Friends Provident were the first group to bring ethical investment to the United Kingdom. In 1983, Friends Provident launched their Ethical Fund, which had a strict investment measures determined by an external party. The ethical fund was followed up The Stewardship Life Fund, The Stewardship Unit Trust and later the Stewardship Individual Pension fund. Today, the funds are known as Isis.

Typically, ethical investment focuses on companies which make a positive contribution to society, such as environmentally friendly and regenerative companies. Other factors include companies which provide good workers’ rights. These companies also stand less risk of coming into conflict with regulators, strike action, boycotts of products and court action, factors which will ultimately affect share prices of other companies. These firms also have better long term outlooks than many environmentally unfriendly groups. Companies which manufacture alcohol or tobacco products are almost always excluded by mutual funds.

Fueled by an increasing awareness of environmental and social issues, ethical investment is a marriage of principles and moderate profits.

Date: 08.11.05