So What is "Ethical Investing" About?
http://www.money-tips.com.au/articles/175/1/So-What-is-quotEthical-Investingquot-About/Page1.html
Liza Mathers
Liza Mathers currently serves as editor for UK based Seek4finance, and thoroughly enjoys her work. During her 9 years in journalism, Liza has won a series of award for personal finance journalism, ranging from awards for campaigning journalism, business scoops, all-round topical UK personal finance related knowledge and her proven ability to explain in simple plain english. Liza has one young child, and is a devoted mother and wife. By Liza Mathers
Published on 09/30/2008
How do you feel about investing in tobacco, pornography or animal testing? Do you want your hard-earned cash to fund repressive regimes, support exploitation of labour in developing countries or contribute to environmental destruction?
So What is "Ethical Investing" About?
How do you feel about investing in tobacco, pornography or animal testing?
Do you want your hard-earned cash to fund repressive regimes, support exploitation of labour in developing countries or contribute to environmental destruction?
Put like that, of course not.
But if you are a shareholder in a number of companies you may be unaware of exactly what they are all up to.
If you have your money in collective funds, you may have an even more remote grasp of what they all do.
Might there be a controversial armaments business nestling in your portfolio, when only last week you were sounding off to friends about the iniquities of gun running to the Third World?
People exactly like us get caught up in situations exactly like that, which is why ethical investment was created.
Ethical Investing has come of age and is now a force to be reckoned with.
Ethical funding places your money with concerns that will leave you with at least a clear conscience, if not a positive contribution to society and the world.
And if you don't believe that the devil has the best tunes and that you must be giving up a certain potential for profit by pursuing such a course, you could be off-target.
A number of ethical funds, whether unit trusts or pension funds, are achieving above-average performance precisely because they are concentrating on those market sectors that are having to expand rapidly as the world tries to tackle growing environmental and social problems.
Research indicates that at worst, ethical investment is no less profitable than any other form of investment.
At one end of the scale, some ethical funds simply screen out companies in industries, such as tobacco, which are increasingly constricted by adverse publicity, litigation and tightening legislation.
But it's a business decision: such firms' share prices are suffering as a result, with few prospects of a turnaround.
Other funds concentrate specifically on the positive sectors, such as those encouraging fair trade and environmentally friendly products. Investments are with businesses that employ good working practices with emphasis on health and safety, education and training, opening management, equal opportunities, good customer relations, community involvement and pollution control.
The feeling is that such companies not only have a moral advantage but are also better equipped to succeed in our 21 st-century world.
As well as understanding the standards, ethical fund managers are particularly well informed in profitability to the extent that they become directly involved with certain companies in their role as major shareholders, encouraging them to adopt qualifying practices.
Small and medium-sized companies are the most likely to conform to the ethical fund requirements, but managers would like to see increasing numbers of major companies taking notice, in turn driving up their fund performance.
This emphasis not only on ethics but on social responsibility is likely to have a growing effect on companies' behaviour.
Do you want your hard-earned cash to fund repressive regimes, support exploitation of labour in developing countries or contribute to environmental destruction?
Put like that, of course not.
But if you are a shareholder in a number of companies you may be unaware of exactly what they are all up to.
If you have your money in collective funds, you may have an even more remote grasp of what they all do.
Might there be a controversial armaments business nestling in your portfolio, when only last week you were sounding off to friends about the iniquities of gun running to the Third World?
People exactly like us get caught up in situations exactly like that, which is why ethical investment was created.
Ethical Investing has come of age and is now a force to be reckoned with.
Ethical funding places your money with concerns that will leave you with at least a clear conscience, if not a positive contribution to society and the world.
And if you don't believe that the devil has the best tunes and that you must be giving up a certain potential for profit by pursuing such a course, you could be off-target.
A number of ethical funds, whether unit trusts or pension funds, are achieving above-average performance precisely because they are concentrating on those market sectors that are having to expand rapidly as the world tries to tackle growing environmental and social problems.
Research indicates that at worst, ethical investment is no less profitable than any other form of investment.
At one end of the scale, some ethical funds simply screen out companies in industries, such as tobacco, which are increasingly constricted by adverse publicity, litigation and tightening legislation.
But it's a business decision: such firms' share prices are suffering as a result, with few prospects of a turnaround.
Other funds concentrate specifically on the positive sectors, such as those encouraging fair trade and environmentally friendly products. Investments are with businesses that employ good working practices with emphasis on health and safety, education and training, opening management, equal opportunities, good customer relations, community involvement and pollution control.
The feeling is that such companies not only have a moral advantage but are also better equipped to succeed in our 21 st-century world.
As well as understanding the standards, ethical fund managers are particularly well informed in profitability to the extent that they become directly involved with certain companies in their role as major shareholders, encouraging them to adopt qualifying practices.
Small and medium-sized companies are the most likely to conform to the ethical fund requirements, but managers would like to see increasing numbers of major companies taking notice, in turn driving up their fund performance.
This emphasis not only on ethics but on social responsibility is likely to have a growing effect on companies' behaviour.