Can you afford to be ethical when it comes to your money?

There's a reason why more people than ever are turning green.
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The Independent Online

Fed up with the returns and attitudes at mainstream finance firms, the Shropshire teaching assistant Sue Boulding and her partner, Steve, decided to look elsewhere for a more suitable home for their finances.

"We'd had our fingers burned by investing in pension schemes and an endowment mortgage with conventional financial companies, and it was all the more upsetting when we realised what these companies invested our money in," Sue (pictued below) says.

The couple opened investment and savings accounts with Triodos Bank and the Ecology Building Society. "They both offer a gimmick-free investment that doesn't harm the environment, or abuse animals, and doesn't rely on some poor devils working all hours in lousy underpaid jobs to pay our interest rates.

"I also like the idea that our investment with Triodos helps a start-up and sustainable businesses that the usual companies wouldn't consider."

The couple have also switched current account from Lloyds TSB to the Co-op Bank. "They don't support armaments manufacturers, oil and mining companies and so on, which is important to me."

Importantly, Sue believes the couple haven't lost out by turning to green and ethical finance firms. "We've had a fair return – certainly comparable and competitive with non-ethical institutions."

Choosing ethical finances is a growing trend. EIRIS, the non-profit sustainable investment research firm, reports that the amount of money invested in Britain's green and ethical retail funds has just reached a record high of £11.3bn. In the last decade the number of ethical investors tripled from 250,000 in 2001 to three-quarters of a million today.

National Ethical Investment Week launches tomorrow to highlight the opportunities and issues around green finances. Barry Tootell, chief executive of the Co-operative Bank, says the lack of trust in mainstream banks has led many more people to think about the ethics of their finances.

"The financial crisis has led to increased awareness of how financial services providers use customers' money," says Tootell. "As a result an increasing number of consumers are considering issues such as trust, responsibility and ethics."

At the same time, green issues can prove to be investment winners, says Penny Shepherd, chief executive of UKSIF, the sustainable investment and finance association. "International agencies predict that by 2030 the world will need to produce around 50 per cent more food and energy, together with 30 per cent more fresh water, while mitigating and adapting to climate change. Companies that are managing those environmental, social and governance issues well are likely to be the star performers of the future."

It's an investment opportunity that was spotted long ago. In fact the UK's first retail ethical investment fund, F&C's Stewardship Growth, was launched in 1984. However, the firm's Jason Hollands says people need to look closely at funds to ensure they fit with their principles and their investment objectives. "Careful study of the different options on offer is essential," he says.

Profits and principles

Green and ethical investment in 2011 is a philosophy rather than a specific technique, says Penny Shepherd, chief executive of UKSIF, the sustainable investment and finance association. "Modern green and ethical investment aims to make money and make a difference in society at the same time, and it encompasses a range of investment styles. For example thematic investing selects companies that offer profitable solutions to problems like climate change or poverty reduction. It also includes investments that practice responsible ownership, by using their influence as shareholders to ensure companies behave responsibly."

She points out that the market has evolved beyond equity investments alone. "There is a much more diverse range of green and ethical financial products available including current accounts, mortgages and insurance," says Shepherd. "There is also ample evidence that green and ethical investment does not mean sacrificing financial performance. You can have profits and principles."

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