Simon Read: Who says that ethical pension funds don't pay?

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The Independent Online

Can you invest ethically and still make decent returns? Of course. In fact if you invest in the right green shares or funds, you could even make more.

Traditional ethical investments operate on the basis of avoiding firms that are involved in questionable activities. That's not only the tobacco industry, of course. Ethical funds may also avoid firms involved with animal testing, genetic engineering, arms, alcohol or gambling.

With the traditional approach the so-called screening process – where certain shares are ruled out – reduces the number of investment opportunities. The net effect of that is likely to lower potential returns.

But some funds take a much more proactive approach and actually seek out firms and investment opportunities that make a positive contribution to the environment or improve society.

Sustainable investment seeks out firms involved with positive solutions to the world's ageing population, the global power shortage or the concerns centred around climate change. These firms are just as likely to make a mint as traditional businesses which investors can share in. Some believe they are poised to be tomorrow's business winners.