‘Ethical’ funds ignore climate change

An investigation by independent financial advisers (IFAs) has found that very few ethical and socially responsible funds invest in companies that are directly involved in improving the environment.

IFAs Holden and Partners investigated the top 10 ethical and socially responsible funds in the UK. Their resulting report warns those with a green conscience to read the small print before putting their money in ethical funds.

Because a fund is labelled ‘ethical’ don’t necessarily mean that it is environmentally friendly, as Mark Hoskin, a partner at Holden and Partners, explained:

“An ethical fund will have a whole range of issues that it will look at, such as human rights, animal testing or weapons,” said Mr. Hoskin, “Environment is only part of that.”

He added that his company were “surprised” at what they found, because “even as advisers we thought they might be more involved in environmental stocks.”

Shares in environmental companies can be more risky than investments in multinationals with questionable green credentials.

“I think investors need to go to advisers who know what they are doing and can work out what the investor is trying to achieve,” said Mr. Hoskin. “The investor may be prepared to risk their money if it is for environmental reasons.”

In other news, Standard Life Investments have announced that their ethical fund will no longer invest in airline stocks. A survey by the company found that 30% of the company’s investors wanted airlines excluded.