The idea of ethical investment has a long pedigree. Quakers have invested ethically since the 1500s, refusing to put their money into the slave trade or alcohol. The Islamic, Christian and Jewish faiths all have laws against usury and not profiting from others.
Put simply, ethical or socially responsible investment (SRI) takes into account social, environmental and other considerations in seeking out projects that make a positive contribution to the welfare of humanity and the planet, and excluding those that cause harm.
As a movement, ethical investment began in the 1970s with the Pax World Fund, set up in the wake of the Vietnam War to avoid associated investments. Early strategies focused on ‘avoidance investments’ by anti-war and faith groups, trade unions and charities.
This was followed by ‘divestment strategies’ involving the sale of shares to register a political view and effect change. The campaign against companies doing business with apartheid-era South Africa was the most notable.
Ethical investment has come a long way from the days when such investments were nicknamed ‘Brazil’ funds because people who put their money in them were thought to be ‘nuts’. According to the Ethical Investment Research Service (EIRIS), the UK market was worth over £6 billion in 2005, an increase of around 600 per cent in 10 years.
Deciding your criteria
So what do you need to do to become an ethical investor (apart from having some money to invest)?
First, decide your criteria. It would be hard to find a fund that is all things to all people – it’s a very subjective process, with fund managers seldom all screening for the same things.
Screening can be purely negative – against companies seen to be bad for our health, the environment, human and animal rights.
This is sometimes divided into ‘dark green’ and ‘light green’ investments.
‘Dark green’ strategies exclude most large companies and those involved in the arms trade, oppressive regimes, animal testing, factory farming, gambling and tobacco. An example of a ‘dark green’ fund is Aegon’s ethical fund.
It excludes companies operating in countries that are involved in GM food, or in meat and dairy products to appeal to vegan investors.
‘Light green’ strategies hold less risk and may consider banks, pharmaceutical and oil companies that have shown a commitment to improving practices and policies.
These sorts of investments have become more common in recent years as many funds have relaxed their criteria in a bid to increase returns.
Positive screening actively seeks companies with good social and environmental practices – fair trade, organic products and alternative energy solutions fall within this category. Most funds screen for a mix of positive and negative.
By dangling the carrot of more investors, the idea is to encourage companies to adopt more ethical policies and practices.
Picking a starter fund
Unless you have nerves of steel, the safest way to invest is to choose from the established funds that spread the risk across a variety of green and ethical investments.
Examples include the Jupiter Ecology Fund, Standard Life UK Ethical fund and Aegon Ethical Equity.
EIRIS has excellent information about ethical investing and a directory of ethical financial advisers.
You could also dip your toe into the waters of cause-based investments.
Although they offer a lower rate of return, they allow investors to support a particular cause, such as organic farms, regeneration or new fair trade initiatives.
Other things you can do
Swap your current bank account. You can’t do much better than a smile or other co-op account. NGOs, trade unions and even Red Pepperbank with Unity Trust Bank, a bank founded by the trade unions in 1984.
For savings accounts, check out Triodos. The bank also offers the Triodos Ethex that lets you buy shares in Triodos Renewables, CaféDirect and the Ethical Property Company, among others.
Islamic finance products are increasingly incorporating more SRI funds along with sharia-compliant products. Parsoli Global Islamic Equity Fund provides a diversified portfolio of equities acceptable under sharia law.
Get a green mortgage through the Ecology Building Society, who only lend on properties and projects that benefit the environment. The Co-op Bank also has a green, CAT-standard mortgage and the Norwich & Peterborough Building Society offers green options.
For students, mortgages and investments may seem very distant but you can still influence the market by encouraging your college to invest its funds ethically. See www.peopleandplanet.org for further information.This material is for general information only. Always obtain independent, professional advice before investing.
Yasmin Gunaratnam reflects on John Berger’s gut solidarity with the stranger
Charlie Clarke and Heather Mendick discuss how to work through the tensions within Momentum
As man-made global warming gets closer to the tipping point, Andrew Simms finds reasons to be positive about averting catastrophic climate change
In this extract from his new book The Candidate, Alex Nunns tells the inside story of how Jeremy Corbyn scraped onto the Labour leadership ballot in 2015
Graham Jones proposes a framework for a diverse movement to flourish
Bryony Moore profiles Stitched Up, a non-profit group reimagining the future of fashion
Musician Eliane Correa reflects on the fading revolution
Trump's victory is another sign of the failure of the centre-left's narrative on climate change. A new message is needed, and new politicians to deliver it, writes Alex Randall
Siobhán McGuirk says the question we are too afraid to ask is simple - what kind of society leads to Donald Trump as President?
The battle lines are clear. Democracy is in peril and the left must take itself seriously electorally and politically. Ruth Potts speaks to Gary Younge, who was based in Muncie, Indiana, for the US election, about the implications of Donald Trump’s victory
Utopia: Work less play more
A shorter working week would benefit everyone, writes Madeleine Ellis-Petersen
Short story: Syrenka
A short story by Kirsten Irving
Mum’s Colombian mine protest comes to London
Anne Harris reports on one woman’s fight against a multinational coal giant
Bike courier Maggie Dewhurst takes on the gig economy… and wins
We spoke to Mags about why she’s ‘biting the hand that feeds her’
Utopia: Daring to dream
Imagining a better world is the first step towards creating one. Ruth Potts introduces our special utopian issue
Utopia: Room for all
Nadhira Halim and Andy Edwards report on the range of creative responses to the housing crisis that are providing secure, affordable housing across the UK
A better Brexit
The left should not tail-end the establishment Bremoaners, argues Michael Calderbank
News from movements around the world
Compiled by James O’Nions
Podemos: In the Name of the People
'The emergence as a potential party of government is testament both to the richness of Spanish radical culture and the inventiveness of activists such as Errejón' - Jacob Mukherjee reviews Errejón and Mouffe's latest release
Survival Shake! – creative ways to resist the system
Social justice campaigner Sakina Sheikh describes a project to embolden young people through the arts
‘We don’t want to be an afterthought’: inside Momentum Kids
If Momentum is going to meet the challenge of being fully inclusive, a space must be provided for parents, mothers, carers, grandparents and children, write Jessie Hoskin and Natasha Josette
The Kurdish revolution – a report from Rojava
Peter Loo is supporting revolutionary social change in Northern Syria.
How to make your own media
Lorna Stephenson and Adam Cantwell-Corn on running a local media co-op
Book Review: The EU: an Obituary
Tim Holmes takes a look at John Gillingham's polemical history of the EU
Book Review: The End of Jewish Modernity
Author Daniel Lazar reviews Enzo Traverso's The End of Jewish Modernity
Lesbians and Gays Support the Migrants
Ida-Sofie Picard introduces Lesbians and Gays Support the Migrants – as told to Jenny Nelson
Book review: Angry White People: Coming Face to Face With the British Far-Right
Hilary Aked gets close up with the British far right in Hsiao-Hung Pai's latest release
University should not be a debt factory
Sheldon Ridley spoke to students taking part in their first national demonstration.
Book Review: The Day the Music Died – a Memoir
Sheila Rowbotham reviews the memoirs of BBC director and producer, Tony Garnett.
Power Games: A Political History
Malcolm Maclean reviews Jules Boykoff's Power Games: A Political History
Book Review: Sex, Needs and Queer Culture: from liberation to the post-gay
Aiming to re-evaluate the radicalism and efficacy of queer counterculture and rebellion - April Park takes us through David Alderson's new work.
A book review every day until Christmas at Red Pepper
Red Pepper will be publishing a new book review each day until Christmas
Book Review: Corbyn: The Strange Rebirth of Radical Politics
'In spite of the odds Corbyn is still standing' - Alex Doherty reviews Seymour's analysis of the rise of Corbyn
From #BlackLivesMatter to Black Liberation
'A small manifesto for black liberation through socialist revolution' - Graham Campbell reviews Keeanga-Yamahtta Taylor's 'From #BlackLivesMatter to Black Liberation'
The abolition of Art History A-Level will exacerbate social inequality
This is a massive blow to the rights of ordinary kids to have the same opportunities as their more privileged peers. Danielle Child reports.
Mass civil disobedience in Sudan
A three-day general strike has brought Sudan to a stand still as people mobilise against the government and inequality. Jenny Nelson writes.
Mustang film review: Three fingers to Erdogan
Laura Nicholson reviews Mustang, Deniz Gamze Erguven’s unashamedly feminist film critique of Turkey’s creeping conservatism
What if the workers were in control?
Hilary Wainwright reflects on an attempt by British workers to produce a democratically determined alternative plan for their industry
Airport expansion is a racist policy
Climate change is a colonial crisis, writes Jo Ram
Momentum Kids: the parental is political
Momentum Kids is not about indoctrinating children, but rather the more radical idea that children have an important role to play in shaping the future, writes Kristen Hope