Problem areas range from the arms industry, companies involved with pornography or alcohol, usury (money-lending for excessive interest), and companies that have "immodest" advertising.
Within each creed there is a multiplicity of levels of interpretation and observance. Swraj Paul, a leading Hindu businessman who is group chairman of Caparo Industries and who was this week named a life peer, says a Hindu's investment stance follows his own conscience.
Interest in religiously-correct investment is being stimulated by the expanding ethical investment movement. Eiris (Ethical Investment Research Service), which is a leading adviser on the ethics of investments, has Quaker connections. Elsewhere, organisations such as the Central Finance Board of the Methodist Church, the Jewish Association for Business Ethics and the Christian Ethical Investment Group of the General Synod of the Church of England have evolved practical approaches to investment.
Devout Muslims have the greatest problems. Previously, wealthy, devout Muslims were restricted to investments such as leasing finance that complied with Sharia (Islamic) law but offered relatively low returns. Now, according to Mushtak Parker, the editor of the Islamic Banker magazine, there is more choice including Islamically-acceptable stockmarket investment funds and Islamic bonds.
The major prohibition for Islamic investments is usury - the charging of what is deemed to be excessive interest. Robert Fleming's Oasis equity fund, which is regulated by Sharia law, donates an annual sum of 0.56 per cent of funds to charity. The sum purifies Oasis of interest carried by the companies whose shares underly the fund. Adherence to Sharia law is enforced by a Sharia supervisory board, an independent committee of three eminent Fiqh (Islamic jurisprudence) scholars.
Islamic law also has a problem with investments in companies with the slightest involvement in pornography, alcohol and gambling. Newsagents selling top-shelf porn magazines are out. Supermarkets and leisure outlets are banned because they sell drink. Individuals must also reject Western financial services companies such as banks and building societies, because their business activities include the payment and charging of excessive interest. Sharia law also discourages high levels of indebtedness. Companies whose shares Oasis buys are relatively unencumbered by debt.
Rabbi Pinchas Rosenstein, the outgoing director of the Jewish Association for Business Ethics, says Jews and Muslims have fundamentally similar ethical investment concerns. He says business ethics are as important to uphold as rituals such as Kashrut - the laws surrounding food. But, arguably, investment ethics are harder to put into practice.
Alcohol is not a problem for Jews. Ethical Jewish investors would not disqualify companies such as WH Smith that may sell a few sleazy magazines on the top shelf, but would reject firms with a big involvement.
Strictly speaking, usury is prohibited to fellow Jews. If a Jew can also afford to lend interest-free to a non-Jew, then he or she must do so. In practice Jewish-owned banks use a system of "partnership" with their investors and borrowers, which gets both lender and borrower around the religious prohibition.
Rabbi Rosenstein says Jewish investment ethics predate the 1986 Financial Services Act by thousands of years, by insisting that individuals giving financial advice should declare commissions or any other interest in the transaction.
The Old Testament decrees that people should not put a stumbling block before the blind. In other words you should avoid taking advantage of someone else's lack of expertise.
Peter Webster, the executive secretary of Eiris, says that Quakerism is the strictest form of Christianity in terms of investment criteria. Quakers exclude 75 per cent of shares in the London stockmarket. These include companies involved in alcohol, tobacco, oppressive regimes and so on. They also actively seek to invest in positively ethical organisations such as those that work to improve the environment. Mr Webster says Methodists have similar principles but exclude fewer companies. Although it publicly withdrew money invested in BSkyB on account of the Playboy channel, the Methodist Church's Central Finance Board generally prefers the softly, softly approach.
By contrast the Church Commissioners, who invest money for the Church of England, disallow investment in just 12 per cent of companies on ethical grounds. For example, it still invests in GEC, the weapons manufacturer. A ban on investing in Nestle because of its baby milk policies in the third world was in force, but has now been lifted.
Profile, page 4