Ethical investment: Are you green with your money

Friends Provident has seven ethical funds under management, totalling £1.3 billion. Spokesman Julia Dreblow says that investors are "people generally interested in environmental issues".

Since June 2000, pension funds have been obliged to disclose their policy on ethical investment. Oxfam and Christian Aid, two of Britain's largest charities, have decided to invest their joint pension fund on an 'ethical' basis. Their money will only go into companies with a negative impact on the environment if they demonstrate a commitment to improve.

Want some Green savings? Norwich Union is launching socially responsible investment (SRI) funds in UK corporate bonds and European shares, while Bank Sarasin of Switzerland promises a similar fund by late summer.

Triodos Bank, an ethical European bank based in The Netherlands, invests in sectors which include renewable energy, organic farming, social housing and fair trade. Its cash mini-ISA pays an annual interest rate of 6%.

Time to go Green in the City? The Jupiter Global Green Investment Trust (JGGIT) launched in January this year, plans to put up to 25% of its cash into high-risk unlisted securities.

Says Richard Craven, of discount broker HCF Partnership: "Investing with a conscience is becoming highly fashionable. Musicians and actors, in particular, take a very close interest into where their money goes."

One of the arguments for investing in Green companies is that they tend to be at the forefront of environmental and social change. At the very least, it should keep money safely away from companies likely to be hammered by campaigns, like Huntingdon Life Sciences which has been targeted by animal rights activists.

The most positive effect of the Green movement so far in the finance world is that companies must parade environmental credentials to attract investment. Builders winning brownie points by building new homes on reclaimed urban 'brown field' sites include Brentwood-based Countryside Developments, which is launching a charm offensive with 'quality of life audits' among homebuyers.

Says Simon Baker, head of the ecology department at Jupiter Asset Managers: "Attitudes change over the years. In the early 90s, there wasn't much interest in companies involved in environmental technologies. The emergence of alternative and renewable energies from 1994/4 saw the thing lift off from a very small base.

"In 1993, there was probably about £800 million invested in Green and ethical companies. Today the total is about £3.5 billion- probably no more than 0.3% of total money invested, but the issue is becoming increasingly important."

Baker has managed the highly successful Jupiter Ecology Fund since August 1994. Though it includes 'old economy' firms such as food retailers, engineers and transport, it benefited greatly from its reliance on new technology.

Other Green funds with good track records include NPI Global Care Income and Scottish Widows Environmental Investors. But plenty of the 100-plus 'Green' funds have mundane track records.

Investors clearly need to balance principles with pragmatism. Going 'Green' is a decent thing to do- but beware of putting too much of an investment portfolio in that direction.

Says Mark Dampier, of Bath based investment advisor Hargreaves Lansdown: "Of the top FTSE-100 companies, only one - Vodafone - passes all the ethical tests which investors have set. Ignore those companies, and you remove yourself from 50% of the market. If the market took off generally, you would miss out on a great deal of fun.

"The other problem is that going for Green companies directs you to the Middle and Small Caps sector, rather than the market big boys.

INFORMATION: Ecology Building Society (01535 635933); HCF Partnership (020 8731 5151); Norwich & Peterborough (01733 372372); Friends Provident (0800 000080); Jupiter Asset Management (0500 050098). Also consult your independent financial advisor.

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