Ethical finance

Hopelessly naive, or the best way forward for financial dealings? You decide.

What's available?

A few years ago, ethical investment funds were privately described as 'Brazil' funds by many financial advisers. Why? Because big business ruled, making a profit was thought to be impossible otherwise, and anybody who wanted one of these funds was clearly 'nuts'. Opinions have changed considerably since then, and ethical investments have become one of the biggest financial growth areas.

You can buy ethical pensions, have an ethical bank account, make ethical savings, or buy shares in businesses that have specific policies regarding their workers, animal testing, or many other issues. Environmental friendliness is sometimes called Socially Responsible Investment (SRI)

Types of ethical investments

There are many kinds of criteria that can be used to pick financial products such as shares and unit trusts. It depends upon your personal values as to which criteria you favour.

• Green issues: sourcing sustainable raw materials, manufacturing without polluting etc. Sometimes includes a 'no nuclear' clause or a 'no GM' clause.
• No alcohol or no tobacco. The 'no alcohol' stipulation may apply to all alcohol, or just companies that seem to be marketing alcopops to underage drinkers etc.
• Treatment of staff. This ranges from sweatshops and banning trade union membership to not having profit-sharing schemes.
• No pornography. A tricky one again, as erotica/obscenity is often in the eye of the beholder if the material contains nothing but consenting adults.
• Arms and munitions. Can be anything from 'peacekeeping' accessories to landmines or instruments of torture.
• Exploitation in developing countries, and oppressive regimes. Selling baby formula instead of promoting breastfeeding in poorer countries, and so on.
• No gambling. Some people may object to this on moral or religious grounds.
• Animal experiments. May be for cosmetics only, or all animal testing including medical research.

Many funds actively seek out companies involved in:

• Educating and supporting their staff
• Good health and safety practices
• Recycling and waste management
• Environmentally friendly products

Of course it is rare, if not impossible, to find any public company that measures up 100% to any wide-ranging standards. It's best to work out what's most important to you, and decide how much leniency you're prepared to allow. If any issue matters to you, always read the small print.

And it isn't just products you can buy. If there's something you're already bought into, such as a bank or some shares, don't be scared to write to the management about changing their policies or point out that they are answerable to their shareholders and need to make some changes.