Originally, the main purpose of ethical investmentments was to avoid investing in businesses or economies that were regarded as unethical, such as companies making armaments or tobacco, or countries where human rights are abused. Later this evolved and investors started to look for companies that provide environmental or social benefits. By the mid-1980’s there was an established presence around the world and the first ethical funds were born. Today there are over 40 ethical investment funds holding over £5 billion and the criteria for inclusion is structured and monitored enabling you, the investor, to pick and choose the criteria best suited to your conscience or ethics.

There are many criteria to be taken into account but typically the companies excluded from ethical investment funds are involved in armaments, nuclear power, alcohol or tobacco, environmental damage (such as pollution or deforestation) and cosmetic animal testing. Other criteria such as health and safety, working conditions, and who the company trades with (for example countries with oppressive regimes) are also taken into account.

Although many ethical funds take account of environmental impact in deciding which companies to invest in, as concerns about the impact of carbon emissions on climate change grow, many investors are looking to invest in green environmental funds that invest in companies that are involved in renewable energy technology or or environmental initiatives.

Ethical and green investing should not be regarded as inevitably producing lower returns than from other investments, and, as with other forms of investment there are no guarantees and, depending on your experience and risk tolerance, there are many ways to go. If ethical or green  investing is important to you, there are many sources of information. We always advise taking advice and for independent financial advice visit: www.moneyjungle.net/advice