Ethical Funds

Ethical Funds

A green or ethical investment fund is structured in such a way that the choice of investments is influenced by one or more social, environmental or other ethical criteria.

Some companies may be excluded from investments because of their involvement in certain activities deemed to be negative, such as heavy polluters, arms companies or animal testers.

Certain companies are included for their positive contributions to society and the environment such as those providing renewable energy, waste and recycling services, or organic farming.

Not all ethical funds are perfect, often a best-in-class approach applies, for example, an ethical fund might have criteria which enable it to invest in the energy sector, but only in those energy companies which are 'best in their class' as they have a better record on the environment and human rights than others in their sector

Ethical Investing is a subjective business and whereas most investors may think twice about investing in companies who profit from death, exploitation or pollution, there may be differences of opinion over tobacco, alcohol or gambling. Even so, it is estimated that there is well over 2 trillion dollars invested in some kind of socially screened investment in the USA alone.

The power that this money and the millions of ethical investors can wield is now recognized as a key driver for developing strategies to protect the environment, alleviate social hardship and stimulate sustainable economic development.