Are You an Ethical Investor?

Parent considering grandchilds future in a grassy field

With COP26 coming to a close just last weekend, I’ve been very focussed on sustainability, the environment and talking to my clients about Ethical Investments. Although, truth be told, Ethical Investment is never far from my thoughts because I do want to make a difference to my children, grandchildren, and the world. The thing is, talking about it is one thing – it’s the doing that matters and of course, there’s plenty to be done!

A Little Ethical Investment History

Around 20 years ago, I joined the Ethical Investment Association and UK Ethical Investment Forum. As a Financial Advisor, anything to do with investment has my attention but the sustainable angle did not just pique my interest, it completely changed my view on investing. Call it what you want – Green Funds, Sustainable Investing, Responsible Investing (the international term is ESG which stands for Environmental Social and Governance Investing) but whatever you call it, I truly believe that if you are an investor, you must invest green. I also have many clients who think the same way as me, one of my clients was a Green Party candidate back in the December 2019 elections, he has plenty of friends who think the same way as he does. I also have Quaker clients who are keen to invest in the “right” thing – and as time goes on, I’m finding more and more of my clients keen to do the same “right” thing for future generations.

Ethical Investments Perform Better

As it so happens, Ethical Investment isn’t just good for the environment, it’s great for the investor too! The
rAs it so happens, Ethical Investment isn’t just good for the environment, it’s great for the investor too! The return is much higher than traditional investment and I should know because I’ve been doing plenty of analysis over the past couple of months as you can imagine. I was keen to understand why it was causing such a positive effect especially as 20 years ago, Green Investing was so left field. I distinctly remember that people were told they might even lose money but that it didn’t matter, as long as they were investing in something positive for the environment. It’s great to act positively for the environment but honestly, no one wants to lose money and twenty years later, ethical investors are doing both, creating a better world for the future and making money – win win in my book!

A good example is energy production. The renewable energy wind farms that you see dotted around the countryside took years to develop but now they’re in place, there’s free energy – whereas traditional fossil fuels have to be extracted, drilled, burned, refined and transported – it’s expensive and less profitable than wind power and wind power produces less emissions and lowers air pollution. Institutional investors are moving over to renewable energy because of this. Those who invested in wind power 15 or 20 years ago are now enjoying superb returns and feeling smug that they invested ethically. That’s just one example, meanwhile, every single ethical fund has returned more than traditional investment.

The Future for Interface is Only Ethical

So here’s the crunch that you’ve been waiting to read about. Originally, Interface used to offer traditional
investment, then we also added Ethical Investment to the offering. Now, I don’t want to offer any
So here’s the crunch that you’ve been waiting to read about. Originally, Interface used to offer traditional investment, then we also added Ethical Investment to the offering. Now, I don’t want to offer any investment opportunities to my clients unless they are ethical. So I’ve stopped traditional investments. It’s been at the back of my mind to do this for a while, but I got the push I needed just last month when one of my younger clients, a lady who is just 32 years old, and I had a meeting. She’s putting a sum of money every month into a pension, and I asked her where she wanted to invest her money. She told me she only wanted to ethically invest because there is no point in investing in anything if the world isn’t going to be worth living in by the time, she reaches the age of 60! How right she is! I didn’t stop thinking about her words and mentioned it to Sarah Harvey, my brilliant administrator. She herself is so passionate about ethical investing, she was completely on-board, particularly as she has a 9-year-old son and she worries about his future.

The upshot is that Sarah and I have moved every single Interface investor client into Ethical Investment and – wait for it – they have NO choice! The way I see it is, if they don’t want to invest ethically then they need to go elsewhere, there’s no other option. I’m also confident that my company is the only business doing this. Keep an eye on my blogs because I will be writing another piece on Ethical Investment for early next year

If you’re not on-board with Ethical Investment yet, here are five good reasons to make the swap:

  1. For the period 2017 to 2021, my own Ethical Investments have produced a 67% return, whereas my traditional investments have produced 35% so not only is Ethical Investment better for you, but it’s also better for the world.
  2. Ethical Investment is rewarding in so many ways, your money will go towards improving the environment, so you feel great, and you’ll be generously rewarded as an investor (as already mentioned above)
  3. You can make a difference in the things that matter to you, so you choose (with my help!) the companies that you are comfortable are committed to social and environmental causes rather than worrying that you’re investing money in companies or projects that engage in activities you don’t approve of.
  4. Ethical Investments are totally transparent, so you know exactly how your money is being invested, without compromising on your own beliefs.
  5. You can support issues that you want to, such as poverty reduction, sustainable materials, renewable power, carbon offsetting and more.

Of course, there are so many more reasons why it’s the right choice and I invite you to look at our website
as we have a dedicated page on Ethical Investment.

Four years ago, I wrote an Ethical investment guide and you can read it and download it from our website.

I have now made the decision to move all of my clients over to Ethical Investment, I’m delighted that so many of my clients are as passionate as I am – from the young ones right up to my older clients. So much so, they can’t wait for me to move their portfolios – which is keeping me very busy! It’s interesting because in May 2018, the FT published a YouGov poll that revealed millennials are twice as likely as older people to want an Ethical Investment, it seems that times are changing.

Finally, when I discussed the topic with one client, he got excited and pointed out to me how many people can say they’re moving millions of pounds into Ethical Investment? I reckon not very many, but I am doing it and it’s the ultimate in feel-good factor! To me, it’s a no-brainer so I urge you to rethink your investments and go green, if not for yourself, for your children and grandchildren.

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