Ethical investment has become an issue of growing importance in the financial world, though the subject still generates a considerable amount of confusion. Typically, an ethical fund might exclude firms which are involved in tobacco, alcohol, gambling or arms manufacture.
These sort of funds, such as the well-known Friends Provident Stewardship unit trust, offer a reasonable starting point for consumers seeking a way into ethical investment, but there are some problems with this kind of fund. The first problem is that not everyone can agree on what types of shares should be ruled out.
But if this form of off-the-peg ethical investment is slightly hit-and-miss there is another form which offers a more bespoke approach.
This is where investors make their own individual share purchases, including or excluding exactly which shares they want, with the added option, if they buy a particular share, of being able to make their views about the company's activities known to the board of directors.
In the same way individuals with pensions or collective investments such as unit or investment trusts can lobby the institutions looking after money on their behalf to be more proactive on the ethical side.
As well as checking up on whether fund managers had "weeded out" certain undesirable categories of shares, these concerned investors could suggest a positive checklist for fund managers to consider. It might ask if the companies invested in treated their staff well, whether they operated environmentally friendly policies and so on.
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