David Kuo: No, it's not easy being green, but don't be too strict with your shares

Investment Insider

Kermit the Frog once said: "It's not easy being green."

But times have changed considerably since Jim Henson's amphibious Muppet friend's lamentation.

Being environmentally friendly today is not only simple but vital, some say, if we want to play our part in being socially responsible. At the simplest level, ethical investing means looking at companies and deciding whether or not we want to invest in them, based on our beliefs. But if we are too strict with our investing criteria, then we could come away really disappointed, because the number of companies that we can realistically invest in will be very restricted, and this can be unacceptably risky.

There are a number of ways to invest ethically. According to Eiris, which specialises in providing information about companies' social responsibilities, more than £11bn is currently invested in ethical funds. However, when we invest in ethical funds we are effectively delegating responsibility to managers who will either screen out or screen in suitable companies. There is also the issue of management fees, which will eat into returns.

One way to assume greater control of our money and our ethical ideals is to choose our own shares. A good starting point is to examine the main holdings of ethical funds that have presumably done some careful selecting already.

It doesn't take too much effort to arrive at a list of companies, and 10 ethical FTSE 250 companies are listed in the table above. This is by no means a definitive list of mid-cap, ethically focused businesses, but a good starting point for further investigation. The table also includes share prices at the start of 2011 and the closing share prices on 31 September this year.

DS Smith, which manufacturers packaging products, is interesting because it highlights the need for flexibility. It can be argued that the UK, if anything, is suffering from a surfeit of packaging. According to the Department for Environment, Food and Rural Affairs, we generated almost 11 million tonnes of packaging waste in 2009. That said, between 1999 and 2009, there has been a near doubling in recycling to over 60 per cent, and DS Smith has been at the forefront in recycling waste paper.

Cranswick is another company that underlines the need for compromise. It manufactures fresh pork, sausages, bacon and charcuterie, which vegetarians may find unacceptable. It is also hard to imagine that a food producer can be anything but a major contributor to landfill problems. That said, Cranswick has been active in reducing the environmental impact of its business through cutting carbon usage, reducing packaging and cutting the use of processed water by 20 per cent across the board.

One of the things that is wonderful about ethical investing, but confusing at the same time, is that it means different things to different people. That said, a cursory inspection of the 10 companies reveals that a portfolio comprising of one share in each company would have been virtually flat over the nine months. By comparison, the FTSE 250 index fell 14 per cent over the same period.

It is not easy to draw any firm conclusions from this. But what we can say is that making sacrifices about the kind of companies we are prepared to invest in does not necessarily mean sacrificing returns.

David Kuo is director of advice website fool.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Content Writer - Global Financial Services

    £25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Web Developer - PHP

    £35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

    £15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Loan Underwriter

    £18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

    Day In a Page

    The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

    The Silk Roads that trace civilisation

    Long before the West rose to power, Asian pathways were connecting peoples and places
    House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

    The honours that shame Britain

    Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
    When it comes to street harassment, we need to talk about race

    'When it comes to street harassment, we need to talk about race'

    Why are black men living the stereotypes and why are we letting them get away with it?
    International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

    International Tap Festival comes to the UK

    Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
    War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

    Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

    Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
    Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

    'A subversive brothel keeper and Communist'

    Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
    Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

    BBC heads to the Californian coast

    The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
    Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

    Victorian fraudster who shook the Bank of England

    Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
    Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

    Car hacking scandal

    Security designed to stop thieves hot-wiring almost every modern motor has been cracked
    10 best placemats

    Take your seat: 10 best placemats

    Protect your table and dine in style with a bold new accessory
    Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

    Cook not the only one to be caught in The Oval mindwarp

    Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
    Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

    Can Benitez get the best out of Bale?

    Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
    Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

    Beijing witnesses new stage in the Jess and Kat rivalry

    The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
    Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

    Jeremy Corbyn interview: A shrewd operator desperate for power

    His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
    Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

    Isis executes Palmyra antiquities chief

    Robert Fisk on the defender of the ancient city's past who was killed for protecting its future