Socially responsible investing

The future global investment theme!

Taking responsibility for environmental and social issues has never been more popular in the investment world. Figures from the Investment Management Association (IMA) show that there has been a huge leap in the amount put into ethical funds in the last year.

Perception is changing rapidly. Open any newspaper and the chances are you'll find an item on issues such as climate change or freshwater scarcity. Faced with rising fuel prices, water shortages and concerns over food quality, consumers are changing their investment attitudes.

The past few years have seen the emergence of ethical funds in a range of asset classes. You can now invest your money in ethical bonds, property and hedge funds and even spread betting. Dealing with climate change is likely to be the biggest global investment theme of the next few decades and beyond.
Last year, several of the top-performing funds in the UK followed an ethical investment mandate. There is generally an increased awareness of ethical issues such as climate control and the depletion of natural resources, and so ethical funds are currently very high profile.

There is a broad definition of what constitutes an ethical fund. To some it means avoiding certain polluting industries, such as oil; to others it involves actively providing investment in clean, sustainable projects. Others view ethical investment as a commitment to using shares to vote against bad ethical practice in companies.

After some 20 years in the wilderness, ethical investment has now entered the mainstream. According to Ethical Investment Research Service (EIRIS), a charity that carries out independent research into corporate behaviour, the ethical retail fund market was worth £7bn at the end of 2006.

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Article date: 08.07