Profit with a purpose?

Image of World Environment Day logo as we discuss profit with a purpose and ethical investments.

Investing

Julie Hutchison

5th June 2014 at 10:13am



Did you know World Environment Day, the UN’s initiative for encouraging worldwide awareness and action for the environment, is marked this week? It’s well worth checking out their website if you want to find out more – it also offers some handy and practical steps you can take to save energy, change your transport decisions, reduce food waste and use less plastic.

Whilst these environmental issues may not resonate with everyone, they’re examples of areas of concern for some ethical investors who want to ‘put their money where their mouth is’. I include myself in that group – I’ve been making choices about how to invest ethically for a few years now.

For me, it’s also a logical decision about taking the long view, when it comes to investing.

I’m interested in which companies will be the winners (and losers) in the decades ahead before I retire – I’m keen to identify  and support companies that develop new technologies in a range of sectors, to help manage our environmental impact.

Understanding a supply chain

For example, when it comes to wood and paper products, do you care about how they are sourced?  WWF is active in monitoring and campaigning on this issue. Labelling and information is a key part of building confidence in the sector. For example, it’s possible to take steps to identify forestry managed on a sustainable basis in the UK, but the same may not be true for woodland everywhere.I’ve been making choices about how to invest ethically for a few years now. For me, it’s also a logical decision about taking the long view, when it comes to investing.

Similarly, I know I can visit my local butcher or farm shop, and buy meat which is clearly labelled, so I know where it comes from.  That gives me confidence.  But I can’t say the same for the clothes I buy – I feel I don’t have the information and want to know more.

Do you want more transparency with your money?

We know that many investors do want more transparency about where their money is (or isnt) invested – and investor preferences are built into how Standard Life Investments shapes its ethical funds.*1 *2

To help us prioritise how our ethical funds are shaped, we gauge our ethical investors’ preferences around a range of issues via the Ethical Investment Survey.  This survey includes questions about areas to negatively filter out as well as the positive selection of companies who operate in favoured sectors or operate with positive methods.

How have investor preferences changed?

Looking at the trends in the two most recent surveys, a couple of points emerge.

1.  There’s been an increase in the importance of supporting companies with good labour standards in their supply chain.

2.  There’s a stronger desire to avoid companies that manufacture chemicals without proper management of the environmental effects.

3.  There is stronger interest in positively supporting companies that produce life-saving products.

In the course of 2014, the next Ethical Investment survey will be carried out, and we’ll review it for any changes/trends.  What do you think?  What matters most to you when it comes to what your money supports or avoids supporting?  We’d like to hear from you – post your comments below.

*1 http://documents.financialexpress.net/Literature/9789421.pdf

*2 http://documents.financialexpress.net/Literature/9782854.pdf

The information in this blog and any responses to comments should not be regarded as financial advice.

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