At a glance

  • Ethical investing is about investing in companies that create benefits for society
  • You can select ethical investments to match your own moral outlook
  • You can invest in individual company shares or investment funds

At a glance

  • Ethical investing is about investing in companies that create benefits for society
  • You can select ethical investments to match your own moral outlook
  • You can invest in individual company shares or investment funds

At a glance

  • Ethical investing is about investing in companies that create benefits for society
  • You can select ethical investments to match your own moral outlook
  • You can invest in individual company shares or investment funds

Ethical investors want to help improve the world through the money they invest. For some ethical investors, that means supporting companies developing new technologies in sectors such as renewable energy or recycling.

For others, the priority might be companies that treat their employees fairly and support local communities.

Ethical investors include a moral element to their investment decisions. They select investments in companies whose products, activities and corporate practices align with their own moral compass.

The most common way to invest is in investment funds or individual company shares.

Ethical funds

These funds have fixed criteria that the companies they invest in have to meet. For example, the fund manager may decide not to invest in coal producers or companies manufacturing or trading tobacco products or munitions.

Each fund will clearly define its criteria and the fund prospectus will detail the rules it follows when considering companies for investment.

This strategy of actively filtering out and excluding companies based on their products and practices is called ‘negative screening’.

Before you invest in a fund, researching its individual approach will let you know if it matches your own ethical outlook. If it does, you will then have to decide if its risk profile matches your own risk appetite and is compatible with your investment goals.

Sustainable funds

Sustainable funds take a slightly different approach to ethical funds. Rather than exclude companies that don’t match their criteria, they actively target those that have a positive impact on sustainability.

Each fund will have its own definition of sustainability, and this will inform the companies it focuses on when looking for potential investments.

For example, one might put more of a focus on environmental sustainability performance when picking companies to invest in, while others might lean more towards companies with excellent education, training or community-engagement programmes.

This approach of identifying companies making a positive impact is called ‘positive screening’. Some funds push this approach even further and seek out companies making a quantifiable, positive impact.

This is called ‘impact investing’ and it relies on finding companies that can clearly define their positive impact. For example, how much waste does a company recycle? How much clean energy does it produce? How many people has it educated/trained?

Quantifying the sustainable output of the companies in which a fund invests, enables it to tell investors exactly what societal benefits their money is helping to create.

Environmental, social and governance (ESG) funds

ESG funds consider environmental, social and governance factors when deciding which companies to invest in. Each fund has its own set criteria.

Some will prioritise companies with fair executive pay scales and workplace standards, while others will look first at environmental policies or community engagement strategies.

ESG funds might still invest in a mining or oil and gas company that other ethical investments would avoid. This is because the company might have a very strong community engagement strategy or robust environmental policies to mitigate the impact of an accident and offset the impact of their day-to-day operations.

Ethical tracker funds

Instead of choosing the individual companies they invest in, these funds track an index such as the FTSE4Good or the Dow Jones Sustainability Index.

Some funds may track another index, such as the FTSE 100, and then screen out any companies that don't meet their ethical criteria. This might include tobacco and mining companies, for example.

These funds don't actively choose which companies to invest in. Instead, they invest in the funds that make up the particular index they track. This is called ‘passive investing’ and these funds can be a lower-cost option for investors.

Individual shares

Instead of investing in a fund which has invested in lots of different companies, you can choose to buy individual company shares.

This approach gives you complete control over your investments. This might be an option if you can't find a fund with ethical criteria that matches your own moral outlook.

You'll have to be confident in researching exactly what companies do and how they do it, and their annual reports are a good place to start.

It can be difficult to create an appropriate level of risk that matches your own circumstances if you invest in individual company shares. This is because it's more difficult to spread the performance of your investments, and your returns are more reliant on the performance of a small number of companies.

How to invest your money in funds and/or shares

It’s important to remember that the fundamentals of investing are the same when it comes to ethical investments.

You might not get back what you invested, and you should be looking to invest for the medium- to long-term. Think of five years as a minimum investment period.

You also have to align any investment you make with your own appetite for risk and your own particular circumstances.

You can invest in funds and/or shares through online platforms. There are lots to choose from and they will provide access to a different range of investments and carry different charges, so take the time to compare them carefully.

You can do this yourself and decide how much and where you want to invest. If you aren't completely confident of making these decisions and would like some guidance and advice, you can work with a financial adviser.

A financial adviser will help identify appropriate investments for your individual circumstances and take care of all the administration required. They will also ensure that you're investing in the most tax-efficient way to help your money grow.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Ethical investors want to help improve the world through the money they invest. For some ethical investors, that means supporting companies developing new technologies in sectors such as renewable energy or recycling.

For others, the priority might be companies that treat their employees fairly and support local communities.

Ethical investors include a moral element to their investment decisions. They select investments in companies whose products, activities and corporate practices align with their own moral compass.

The most common way to invest is in investment funds or individual company shares.

Ethical funds

These funds have fixed criteria that the companies they invest in have to meet. For example, the fund manager may decide not to invest in coal producers or companies manufacturing or trading tobacco products or munitions.

Each fund will clearly define its criteria and the fund prospectus will detail the rules it follows when considering companies for investment.

This strategy of actively filtering out and excluding companies based on their products and practices is called ‘negative screening’.

Before you invest in a fund, researching its individual approach will let you know if it matches your own ethical outlook. If it does, you will then have to decide if its risk profile matches your own risk appetite and is compatible with your investment goals.

Sustainable funds

Sustainable funds take a slightly different approach to ethical funds. Rather than exclude companies that don’t match their criteria, they actively target those that have a positive impact on sustainability.

Each fund will have its own definition of sustainability, and this will inform the companies it focuses on when looking for potential investments.

For example, one might put more of a focus on environmental sustainability performance when picking companies to invest in, while others might lean more towards companies with excellent education, training or community-engagement programmes.

This approach of identifying companies making a positive impact is called ‘positive screening’. Some funds push this approach even further and seek out companies making a quantifiable, positive impact.

This is called ‘impact investing’ and it relies on finding companies that can clearly define their positive impact. For example, how much waste does a company recycle? How much clean energy does it produce? How many people has it educated/trained?

Quantifying the sustainable output of the companies in which a fund invests, enables it to tell investors exactly what societal benefits their money is helping to create.

Environmental, social and governance (ESG) funds

ESG funds consider environmental, social and governance factors when deciding which companies to invest in. Each fund has its own set criteria.

Some will prioritise companies with fair executive pay scales and workplace standards, while others will look first at environmental policies or community engagement strategies.

ESG funds might still invest in a mining or oil and gas company that other ethical investments would avoid. This is because the company might have a very strong community engagement strategy or robust environmental policies to mitigate the impact of an accident and offset the impact of their day-to-day operations.

Ethical tracker funds

Instead of choosing the individual companies they invest in, these funds track an index such as the FTSE4Good or the Dow Jones Sustainability Index.

Some funds may track another index, such as the FTSE 100, and then screen out any companies that don't meet their ethical criteria. This might include tobacco and mining companies, for example.

These funds don't actively choose which companies to invest in. Instead, they invest in the funds that make up the particular index they track. This is called ‘passive investing’ and these funds can be a lower-cost option for investors.

Individual shares

Instead of investing in a fund which has invested in lots of different companies, you can choose to buy individual company shares.

This approach gives you complete control over your investments. This might be an option if you can't find a fund with ethical criteria that matches your own moral outlook.

You'll have to be confident in researching exactly what companies do and how they do it, and their annual reports are a good place to start.

It can be difficult to create an appropriate level of risk that matches your own circumstances if you invest in individual company shares. This is because it's more difficult to spread the performance of your investments, and your returns are more reliant on the performance of a small number of companies.

How to invest your money in funds and/or shares

It’s important to remember that the fundamentals of investing are the same when it comes to ethical investments.

You might not get back what you invested, and you should be looking to invest for the medium- to long-term. Think of five years as a minimum investment period.

You also have to align any investment you make with your own appetite for risk and your own particular circumstances.

You can invest in funds and/or shares through online platforms. There are lots to choose from and they will provide access to a different range of investments and carry different charges, so take the time to compare them carefully.

You can do this yourself and decide how much and where you want to invest. If you aren't completely confident of making these decisions and would like some guidance and advice, you can work with a financial adviser.

A financial adviser will help identify appropriate investments for your individual circumstances and take care of all the administration required. They will also ensure that you're investing in the most tax-efficient way to help your money grow.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Ethical investors want to help improve the world through the money they invest. For some ethical investors, that means supporting companies developing new technologies in sectors such as renewable energy or recycling.

For others, the priority might be companies that treat their employees fairly and support local communities.

Ethical investors include a moral element to their investment decisions. They select investments in companies whose products, activities and corporate practices align with their own moral compass.

The most common way to invest is in investment funds or individual company shares.

Ethical funds

These funds have fixed criteria that the companies they invest in have to meet. For example, the fund manager may decide not to invest in coal producers or companies manufacturing or trading tobacco products or munitions.

Each fund will clearly define its criteria and the fund prospectus will detail the rules it follows when considering companies for investment.

This strategy of actively filtering out and excluding companies based on their products and practices is called ‘negative screening’.

Before you invest in a fund, researching its individual approach will let you know if it matches your own ethical outlook. If it does, you will then have to decide if its risk profile matches your own risk appetite and is compatible with your investment goals.

Sustainable funds

Sustainable funds take a slightly different approach to ethical funds. Rather than exclude companies that don’t match their criteria, they actively target those that have a positive impact on sustainability.

Each fund will have its own definition of sustainability, and this will inform the companies it focuses on when looking for potential investments.

For example, one might put more of a focus on environmental sustainability performance when picking companies to invest in, while others might lean more towards companies with excellent education, training or community-engagement programmes.

This approach of identifying companies making a positive impact is called ‘positive screening’. Some funds push this approach even further and seek out companies making a quantifiable, positive impact.

This is called ‘impact investing’ and it relies on finding companies that can clearly define their positive impact. For example, how much waste does a company recycle? How much clean energy does it produce? How many people has it educated/trained?

Quantifying the sustainable output of the companies in which a fund invests, enables it to tell investors exactly what societal benefits their money is helping to create.

Environmental, social and governance (ESG) funds

ESG funds consider environmental, social and governance factors when deciding which companies to invest in. Each fund has its own set criteria.

Some will prioritise companies with fair executive pay scales and workplace standards, while others will look first at environmental policies or community engagement strategies.

ESG funds might still invest in a mining or oil and gas company that other ethical investments would avoid. This is because the company might have a very strong community engagement strategy or robust environmental policies to mitigate the impact of an accident and offset the impact of their day-to-day operations.

Ethical tracker funds

Instead of choosing the individual companies they invest in, these funds track an index such as the FTSE4Good or the Dow Jones Sustainability Index.

Some funds may track another index, such as the FTSE 100, and then screen out any companies that don't meet their ethical criteria. This might include tobacco and mining companies, for example.

These funds don't actively choose which companies to invest in. Instead, they invest in the funds that make up the particular index they track. This is called ‘passive investing’ and these funds can be a lower-cost option for investors.

Individual shares

Instead of investing in a fund which has invested in lots of different companies, you can choose to buy individual company shares.

This approach gives you complete control over your investments. This might be an option if you can't find a fund with ethical criteria that matches your own moral outlook.

You'll have to be confident in researching exactly what companies do and how they do it, and their annual reports are a good place to start.

It can be difficult to create an appropriate level of risk that matches your own circumstances if you invest in individual company shares. This is because it's more difficult to spread the performance of your investments, and your returns are more reliant on the performance of a small number of companies.

How to invest your money in funds and/or shares

It’s important to remember that the fundamentals of investing are the same when it comes to ethical investments.

You might not get back what you invested, and you should be looking to invest for the medium- to long-term. Think of five years as a minimum investment period.

You also have to align any investment you make with your own appetite for risk and your own particular circumstances.

You can invest in funds and/or shares through online platforms. There are lots to choose from and they will provide access to a different range of investments and carry different charges, so take the time to compare them carefully.

You can do this yourself and decide how much and where you want to invest. If you aren't completely confident of making these decisions and would like some guidance and advice, you can work with a financial adviser.

A financial adviser will help identify appropriate investments for your individual circumstances and take care of all the administration required. They will also ensure that you're investing in the most tax-efficient way to help your money grow.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

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