Ethical investing used to mean avoiding things like tobacco, gambling, or the arms trade.
Nowadays it’s more likely to mean investing positively in firms that sustain biodiversity and help reduce our carbon footprint.
That may include companies involved in renewable energy, pollution management, or water efficiency.
Climate concerns can also extend the list of avoided firms to any that extract oil or gas, mine coal or metals, or make the plastics that are found in our oceans.
- How to choose a financial adviser
- Your life expectancy and how to fund it
- Beware investment opportunities that look too good to be true
Other criteria might include companies that treat their workers well, do not use complex structures to reduce their tax bill, or are dealing with the gender pay gap among their staff.
Only two banks feature on many ethical lists: Co-operative Bank and Triodos.
If you want to invest ethically, you can find a good independent financial adviser by using a web search. I like adviserbook.co.uk. Enter your postcode, then tick “investment”, “confirmed independent” and “chartered financial planners”.
You can also go to paullewismoney.blogspot.com and search “financial advice”.
Many people ask if investing in what is now called ESG (environmental, social and governance) means getting a lower return. Research organisation EIRIS says it does not.
One caller to Radio 4’s Money Box last year said she was happy earning whatever she got from her animal welfare-friendly investments; more importantly, she slept better at night.
Over the last year, the amount of money invested by individuals in green or ethical funds has grown by around a quarter, and is five times what it was in 2004.
That is still a tiny fraction of the total, but it shows that attitudes are changing.
One final warning. Beware investments masquerading as “green” – many people have lost their money by investing it in forests in South America or firms involved in fitting solar panels.
Assume any promised return of four per cent or more is risky at best, a fraud at worst.