With great wealth comes great responsibility. Placing money into SIPPs, ISAs and other investments could be of benefit to you personally, but what of its impact in the wider world? Where cash goes and how it is used by others is often overlooked – if not by investors, then by their financial advisers. What many don’t know is that investing ethically can yield similar returns, as well as having a positive effect on society and the environment.
The myths debunked
The myths that once revolved around ethical and socially responsible investments have long since been debunked. It is no more volatile than a regular investment, there is no fee differential, and, most significantly, its performances are on a par with those available elsewhere. Ethical investing does not limit your options to a select number of funds; rather, it combines your financial objectives with societal and environmental concerns. This incorporates a larger and more varied amount of holdings than you may be led to believe.
The selection process
The criteria on which these holdings are chosen is divided into two distinct groups: positive and negative selection. The former will support and encourage companies that are associated with environmental protection, safety and security, conservation and recycling, pollution control and ethical employment practices. The latter seeks to avoid companies who engage in harmful or clandestine activities, including but not limited to various abuses and exploitation of workers and animals, morally questionable industries and environmentally damaging practices.
Changing the world – through your investments
Without paying close attention to their accounts, socially and environmentally proactive investors actually run the risk of contradicting and compromising their own personal causes. The horror of inadvertently funding the arms trade, human rights violators or destroyers of ecological systems is not entirely unthinkable. As an alternative, keen individuals can put their trust and their capital into ethical portfolios, safe in the knowledge that they are contributing towards a fairer society and a brighter future.
Some might question just how much their savings can help combat climate change or clamp down on animal testing, but consumer trends can play a significant role in influencing the various institutions. Should enough investors move away from those accounts which engage in questionable practices, the big banks and insurance companies are more likely to follow suit. If there is public demand for it, the corporations will heed the warning. And, judging by figures from EIRIS, there is a groundswell of support for ethical investments, with 38% of the British public interested in ethical financial products, and an overwhelming 90% willing to switch to a ‘green’ alternative when presented with the opportunity.
Value for money?
Of course, as much as societal and environmental concerns will prey on the mind of the conscientious investor, value for money remains the top priority. Can individuals generate as much capital via socially responsible investments? In short, yes. The notion that ethical investments place more prominence on principles than profit has long persisted, but in truth, their performances are likely to yield strong results in the medium to long term. Increased media attention and heightened public awareness does not bode well for the less scrupulous corporations, whose shares could well fall in light of the bad publicity. In this respect, the greener, fairer businesses may actually be the more prosperous choice.
They are growing in popularity, too. Over £13 billion has now been placed in ethical and environmental funds in the UK alone. That makes up over 14% of Europe’s SRI investments, the overall figure standing at approximately £90 billion. Stateside, that number is dwarfed by American funds, the overall investment amount totalling £3.5 trillion. With these accounts backed with green currency more than ever before, socially responsible investments are viable alternatives – and not just from an ethical perspective.
Invest ethically today
Regardless, some advisers neglect to mention these opportunities, lacking the expertise to discuss it in depth and satisfy their clients’ requirements. At Wade Financial, we take great personal pride in helping our clients achieve their personal goals, and are well placed to offer advice on socially responsible investments.
Having worked extensively on charitable causes within our area, we strongly believe in supporting communities both locally and nationally. Wade Financial will work with you to make a positive impact, on both your society and on your returns.
Come and talk to us today, and find out how you can help to change your world, one pound at a time.