The first UK ethical funds were launched nearly 30 years ago. At that time considering ethical issues when you made an investment decision was seen by many as a niche activity. How times have changed! 

Today, people are increasingly voting with their feet - buying greener or more ethical products - sometimes because of their personal views - but equally often because they are desirable products. In the investment world there are other drivers too. Legislation and regulation are encouraging companies to manage their environmental, social and ethical impacts ever better. This on-going shift has brought diverse business and therefore investment opportunities.  

Investment managers are increasingly recognising that companies with successful green or ethical credentials may be positioning themselves for long term success - and that their clients are increasingly interested.

As a result green and ethical investment funds – or 'sustainable and responsible investments' as they are also known – have continued to grow in spite of the economic downturn. There are now approaching 300 green or ethical options available to individual investors. 

Although leading edge ethical business practices are no guarantee of success, they are often viewed as an indicator of good management, which is why some fund managers research these issues in detail.

Green and ethical funds vary greatly. Most are referred to as ‘sustainable’, ‘responsible’, ‘green’ or ‘ethical’   investments. Many funds of this kind which are available to individual investors are collective investments, investing in around 20-50 companies in order to spread investment risk. They also tend to invest across a range of different business areas for the same reason.

Some funds research a wide range of ethical, social and environmental issues and have numerous specific policies that set out what the fund will and will not invest in. Others focus on themes such as; sustainability, the environment or cleaner technologies. For most, their aim is to focus investment in companies which are considered to be leaders in their field and with strong green or ethical credentials. Issues such as these are considered alongside financial criteria as fund managers aim to achieve the best possible investment performance whilst sticking to their published ethical approach.

Independent financial advisers are able to offer advice on a wide range of investments of this kind.

It is increasingly common for financial advisers to ask clients whether or not they are interested in taking environmental, social, ethical or religious issues into account when considering where to invest; however they are not obliged to do so. 

If this area is of interest to you it is a good idea to let your adviser know. If you are contacting an IFA for the first time or using the adviser search form on unbiased.co.uk you can select the ‘ethical investment’ box to indicate that this is an area you are interested in. This will generate a list of advisers with experience in this area for you.

Do remember however – this is a diverse and growing investment market. There is a great deal of variation between investment options because investors have a wide range of goals. This means an adviser is likely to have to carry out research for you to make sure your personal aims are met - as one size does not fit all! 

The value of investments can fall as well as rise and this means that you could get back less than you invest. Some funds carry additional risk because of the assets they invest in.

Julia Dreblow / www.sriServices.co.uk