For many people who think of themselves as environmentally aware, or as having a social conscience, the words ‘ethical investment’ might seem an oxymoron. Capitalism and the market system are getting a lot of bad press at the present moment; and maybe rightly so but could these people be missing a trick?
- The fact that the global economy is run on the market system means that it is via that system that you can truly affect change;
- If you are unhappy with what the people at the top table are doing, should you ignore them and leave them to it? Or pull up a chair and state your case?
It’s not just people at the two extremes of this dilemma that are involved. There are many shades of green. In a recent poll by YouGov 44% of people who already invest stated that they would like some or all of their investments to include ethical or green considerations. That’s a lot more than a concerned minority. That’s just a small step away from a majority.
Mainstream ethical investment
Ethicality has moved away from the margins and taken centre stage as part of the fabric of our society, and this is how it had to happen. Those in mainstream society are never going to start growing dreadlocks and living in the woods, but once they start thinking of the bigger picture, of the undeniable consequences of their actions, and of their power as the majority, true change can happen. Until recently it was unusual for people to think beyond their immediate sphere of influence. Buying shares or investing in a fund would only be considered for the financial effect it would have on the individual. No one worried about whether it was spent on slash and burn operations in the tropics, or arms to brutally suppress free association in far flung countries. Those days are over.
It would be naive to think that these things no longer happen. The point is, now we know about it. The communications revolution has given us the greatest power that the man in the street has ever had; knowledge and information. As Benjamin Franklin once said, “An investment in knowledge pays the best interest”.
So, armed with the knowledge that many investments support unethical developments and projects, how can you make investments that avoid that? There are a couple of ways of looking at this. The first is to make investments that avoid the bad stuff. Ethical investments can apply a criteria that dictates how the money is invested, thus avoiding companies with a poor record on human rights or bad environmental credentials. If you want to take it that step further you can apply positive criteria. This means that rather than simply avoiding the bad guys, your investment will actively seek out the good guys, using your investment to fund ethically positive schemes such as renewable energy, sustainable forestry or environmental clean ups.
- The ethos behind ethical investment is evolving. It’s no longer just about avoiding the negative; it is increasingly about supporting the positive.
- Ethical investments are now worth well over £11.5billion in the UK alone, and it is a growing market.
One of the perceived problems with ethical investments is that it’s a way of preaching to the converted. Your ethically invested pounds can make a real difference to, let’s say, the life of a small African village that, thanks to you, now has clean running water. This of course really is a great thing. The true acid test comes when you can make someone invest in something ethical because it pays them to do so. This might jar with you philosophically, but remember, we’re trying to affect real change here, not promote a charitable outlook.
So do the figures stack up?
Well, that is an impossible question to answer. Ethical investments, like all investments, can either fail or prosper; they are in the mainstream and thus must be subject to the same market forces. “Please remember the value of your investments can fall as well as rise. Past performance is not a guide to the future. Income is not guaranteed and your capital is at risk.” They say it quickly at the end of all the adverts and we tend to dismiss it but it’s true. Investing, whether ethical or not, will usually include some form of risk.
There are many ethical investments that are considered safe, or at least, as safe as you could hope for. Installing solar panels can return more than 10% over 25 years. This is not to be sneezed at and, although maybe not quite as high as some investments available, it’s a reasonable return and compares favourably with conventional investments. This is important as it is a conventional investment. People can invest in it, not just because it’s green, but because it makes financial sense. Someone could even invest in it without giving any thought to its environmental consequences. That has got to be a good thing hasn’t it?
Arms factory or wind farm?
So here’s the dilemma; if someone can invest in something regardless of the ethicality, he could just as well invest in an arms factory as in a wind farm. Whilst bringing ethical investments into the mainstream it is important not to lose sight of the goal. If the goal is a better, freer, greener and more equal society, then by raising awareness and presenting ethical choices as valid choices, we’re already half way there. If your intention is to introduce morals and ethics to the grey suits that wield the financial power in the world; well, that is a laudable thing and good luck with it. If the intention is to use their money as a power for good in the world, then presenting them with profitable investment opportunities seems like the logical way forward.
Bamboo has been used by man for thousands of years for a reason; it grows quickly with very little care required and it has many different uses. Bamboo produces up to 20 times more timber per hectare than the average farmed timber and is without doubt one of the fastest growing, highest yielding ethical investment products available to the UK market. More information on investing in bamboo.
Ethical investments can work, and make a real difference in the world. They can also generate returns that compare favourably with other investments on the market. Also, don’t assume that if something is labelled green or ethical, it automatically includes certain characteristics. Question everything and, when making an investment, demand to know where your hard earned cash is going.
- Bamboo investments
- Forestry investment
- Ethical forestry investment
- Global forestry investments
- Renewable energy investment
- Teak investment
- Timber investment
There are two main types of alternative investment, the first is ‘ethical investments’ as outlined above and the second is known as green investments and includes trading in emissions or carbon, solar and renewable energies.