A fresh start - make money and make a difference in 2010

By: Mark Robertson, EIRIS
12-Jan-2010

If you've resolved to lead a more sustainable lifestyle this year, now is the time to join the growing number of people who want their money to do more than simply produce a profit.
 
Ethical investment has come a long way since the UK's first ethical fund - the Friends Provident Stewardship fund - was launched a quarter of a century ago and amidst some scepticism in the City.  At the time, many doubted that ethical funds would attract more than a few million pounds.  But over the last decade, growing consumer interest in ethical issues has continued to drive demand and there's now over £9 billion invested ethically in the UK. 

In the same way that increasing numbers of us are recycling our rubbish, choosing energy efficient appliances, buying fair trade products and switching our utilities to a green energy provider, more of us are now also considering green and ethical options as part of our financial planning.

Increasing numbers of us are as concerned about whether or not our investments fit comfortably with our environmental and social concerns as we are about securing healthy financial returns.  A recent poll of UK consumers conducted by Ipsos/MORI on behalf of EIRIS found that a third of us are likely to consider ethical issues when buying a new financial product.

More recently, the credit crunch and ensuing financial crisis has focused attention on what really happens in some of the world's biggest banks and financial institutions. Many of us are still recovering from the shock of discovering how the complex web of sub-prime mortgage debt stretched across the world's banks. An event which very nearly led to a number of well-known high street banks disappearing altogether and which highlighted how a focus on short-term financial gains can lead to some very nasty consequences.

This has meant that banks which take a more long-term approach and which are transparent about who they will and won't lend to, look increasingly attractive to new investors. As a consequence, since the start of the credit crunch green and ethical banks such as Triodos, and the Co-operative have reported significant increases in the numbers of people looking for a bank that takes a more sustainable approach to lending and investing. 

This all adds up to an increased level of consumer interest in responsible, green and ethical finance - and evolving expectations around how banks and financial institutions should prioritise ethical issues within their lending and investing our money.

EIRIS' public opinion survey showed that we want banks and financial institutions to prioritise protecting human rights, tackling climate change and investing in fair trade in their lending and investing activities. Avoiding "sin" stocks such as companies in alcohol, gambling or armaments - which have traditionally been the focus of ethical investors - was of less interest.

As our own expectations of ethical investment have evolved, so too have the green and ethical financial products. With over 90 UK green and ethical funds now on offer the good news is that there's a lot more choice available.  Saving and investing ethically is no longer just about screening out negative areas like tobacco producers or arms manufacturers from investments.

Ethical investment offers real opportunities to make a difference by focusing investment in companies whose activities contribute to building a fairer, more sustainable world. Many of today's green and ethical funds take a thematic approach and focus their investment on themes such as climate change, urbanisation, water scarcity and climate change.
 
Others adopt an engagement approach and lobby the chief executives of companies they invest in, or use their vote at shareholder meetings, to bring about positive change. Increasingly, engagement is playing a key role as fund managers use their influence as shareholders to encourage companies to respond to the various environmental and social challenges they face.

However, many of us remain unaware of opportunities which exist to help us rearrange our finances to match our own ethical concerns. EIRIS has therefore launched www.YourEthicalMoney.org - the UK's first consumer website dedicated to green and ethical finance. The new new website aims to empower consumers to make green and ethical product choices that will help build a more sustainable financial future.

From banking to investments, mortgages to pensions, credit cards to child trust funds, the non-profit site provides free, independent and unbiased information on all aspects on ethical finance.

You can use the website to search for your existing bank or building society, as well as your insurance, credit card or mortgage provider, to find out how they measures up against a set of specially-developed green and ethical criteria. You can also search for investment products, including ISAs and funds that match their green and ethical concerns; learn about how their pension scheme invests or find an ethical child trust fund. The site also features a section dedicated to student finance and guides on financial exclusion and greenwash in financial product marketing.

The good news is that there are now more green and ethical financial products available then ever before. So if you are serious about leading a more sustainable lifestyle in 2010 now is the time to consider giving your finances an ethical makeover. You don't have to tackle everything at once. In the same way that you might drink Fair Trade coffee some of the time, by choosing even one green financial product, you are proving that doing something is better than doing nothing.