ethical investments Devon
Home About Us Services Corporate Services Online Services Resources Our Clients Contact Us  
Pensions Investments Mortgages Life Assurance General Insurance Long Term Care Healthcare Wills & Estate Planning
Types of investment Other considerations FAQs Glossary Offshore investments Ethical investments    
Types of ethical investment FAQs Glossary          
ethical investments Devon
What is an Ethical Investment?

What is an Ethical Investment? Simply put, an ethical investment seeks to invest in companies that make a positive contribution to the world, and seeks to avoid companies that harm the world, its people or its wildlife. There are funds that merely exclude investment in specific activities or industries such as tobacco, gambling, alcohol and armaments. Others take a more proactive stance, actively looking to invest in companies involved in environmentally sound, socially progressive businesses.

Real expansion of ethical investments occurred through the late 1990s and 2000s and means there is now an extensive range of funds available. It has been true in the past that some ethical funds have lagged their non-ethical counterparts (partially due to the growth of non-ethical companies), however now that more emphasis is being placed on the environment by governments and individuals alike environmentally conscious funds offer an interesting opportunity. Luciano Diana, manager of the Pictet Clean Energy fund made the following commentary:

“The fact that government support for clean energy is increasing despite the current economic climate makes the sector even more remarkable. We believe that overall energy prices will increase over time, on a three to five year time horizon. Support for the valuations of renewable energy companies will be greater, because the higher oil and gas price, the more attractive wind and solar energy become on a relative basis.”

An ethical fund is an equity-based investment intended for medium to long-term investment, so its value can reduce due to stock market movements, although it can also rise. This means you may not get back all the money you invested.

Levels and bases of, and reliefs from, taxation are subject to change and any tax reliefs referred to are the current ones and their value will depend on the circumstances of the individual investor.

Investment Criteria

Ethical, or Green funds generally operate on the following bases:

 
  • Positive Criteria
        Provision of excellent products and services, which are of long term benefit to the community

    Conservation of energy or natural resources

    Environmental improvements and pollution control

    Good relations with customers and suppliers

    High employee welfare standards
     
  • Negative Criteria
        Environmental destruction

    Unnecessary exploitation of animals

    Trade with oppressive regimes

    Pornography

    Weapons manufacture

    Tobacco or alcohol production

    Most UK ethical funds are based on a combination of positive and negative investment criteria. Some emphasise the former while others concentrate on the latter, and some try to strike a balance between the two. Most ethical fund managers use external consultancies such as the independent Ethical Investment Research Service (EIRIS) to screen companies. EIRIS was originally set up in 1983 with the help of churches and charities, which had investments and needed a research organisation to help them put their principles into practice. Most ethical funds have panels, which set their criteria and establish an approved list of companies.

    Ethical funds are intended as medium to long term investments (usually considered to be five years or more). Because they are equity-based, they are dependent on stock market movements. It also means your capital is not usually guaranteed to be safe and so you may lose some or all of it.

    If the investment is a unit-linked one, its value can reduce in direct relation to the stock market prices of its underlying assets, although it can also rise. This means you may not get back all the money you invested. If it is a with-profit arrangement, there is not the same direct link between the underlying assets and the value of your policy. This is because the insurance company holds back some profit from good years to offset losses in poor ones - this is referred to as smoothing. The provider cannot withdraw any reversionary bonuses declared, although your early withdrawal may result in a Market Value Adjustment - effectively a financial ‘penalty'.


    Levels and bases of, and reliefs from, taxation are subject to change. Tax reliefs referred to are those currently applying and their value will depend on the circumstances of the individual investor.

    Hedgelands Financial Services, Hedgelands, Abbotskerswell, Newton Abbot, TQ12 5PW
    Registered in England No. 4694508.  Registered Office 32 Monk Street, Abergavenny, Monmouthshire, NP7 5NW
    Hedgelands Financial Services Ltd is authorised and regulated by the Financial Conduct Authority, FCA Registration Number 624282. Sitemap
    Hedgelands Financial Services
    Hedgelands
    Abbotskerswell
    Newton Abbot
    Devon   TQ12 5PW

    map

    Telephone:

    01626 360654

    General Insurance:

    01626 438184

    Independent Financial Adviser
    independent financial adviser Newton Abbot
    ethical investments Devon ethical investments Devon