19th October 2015 at 4:30pm
“Today’s choice of ethical or values-based investment funds means you can make financial decisions that support your values and morals without sacrificing investment returns.”
– Amanda Young, Head of Responsible Investment at Standard Life Investments.
For those who want to invest their money in an ethical way, there are a lot more options than there used to be, offering healthy returns. Profit and principle can go hand in hand.
1. It’s easy to match your investments to your values
We’ve all seen what irresponsible company behaviour can do to us personally, our communities, environment and markets. But you have a choice – a powerful way to have your say in these issues.
Today’s variety of values-based investment funds means you can choose to invest in companies that are committed to doing what’s right for society and the environment.
2. It makes good investment sense
Investing in an ethical or values-based way doesn’t mean you have to compromise on returns.
Standard Life Investments believes astute companies recognise that contributing positively to employees, the community and society means they can be better placed for future growth. On the other hand, companies that pay no regard to their impacts risk harming both their reputation and ability to generate long-term investor returns.
“As people begin to choose to invest in those companies that are committed to doing what’s right for society, the long-term potential of such investments improves,” says Lesley Duncan, Manager of the Standard Life Investments UK Ethical Fund.
3. You have lots of options
Today, there’s lots of choice when it comes to finding a fund that follows values-based criteria, including lower-risk ones.
Some are called ethical or green funds, others are classed as socially responsible investment (SRI) or sustainable funds. And there are ESG – environmental, social and governance – funds.
Ethical funds tend to screen companies in or out depending on their industry activities. A socially responsible fund may be more concerned with a company’s contribution to employee welfare and the society in which it operates. And some funds focus on a mix of screening criteria and encouraging positive corporate behaviour.
4. The sector is changing to reflect investor sentiment
Ethical, green, SRI, ESG and beyond, the values-based investment world has moved on and is now a much more progressive and active environment. These days, strict negative screens are being supplemented by positive criteria and ‘best of sector’ type approaches to reflect the changing attitudes and demand from values-based investors.
But it’s not just the way these funds are managed that’s evolving. The companies which the funds invest in are more often doing things the right way as well. Increasingly companies are taking heed of growing investor influence and operating in a more sustainable way – and benefiting accordingly.
Interestingly, Standard Life Investments’ 2015 annual review of ethical investor sentiment shows seven of the top 10 priorities for ethical investors are positive criteria. In particular, investors consider high standards of business ethics and human rights to be the most important criteria.
5. You don’t need to sacrifice financial returns
Investing so that you choose profit with purpose can help you align your money to your values.
You don’t need to compromise.
Find out more about this in the video from Gareth Trainor, Head of Investment Governance – Can you invest ethically without sacrificing returns? – which sits on our Good Money Week 2015, ethical investments hub page here. You can also hear from Gareth about the consistently good performance of our UK Ethical Fund.
As with any investment the value of your investment can go up or down and may be worth less than what was paid in.
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