Will Ferguson, of Triodos Bank ,looks at some of the options available for the conscientious investor.
Money. Some say it makes the world go round, others that it’s the root of all evil. Whichever side of the fence you sit on, it’s clear that money has a powerful influence on our lives, society and the environment.
Earlier this month the Government’s Stern Review gave a stark warning on the economic costs of climate change, stating that we can’t afford to wait to tackle this global problem. While the growth in sales of Fairtrade and organic goods demonstrates that UK consumers will pay more for a product if they can see a social benefit from it – like a better deal for people in the developing world, or a way of farming that’s better for the environment.
But what about your money when you’re not spending it? Many don’t think about it, but anyone who’s got savings in a bank is effectively lending it their money. Banks profit from lending this money out to someone else, but it’s normally almost impossible to find out who.
But there is an alternative. A handful of ethical banks - including Triodos Bank, Ecology Building Society and the Charity Bank - are breaking the financial mould, with a more progressive approach that values people and planet as well as profit. Triodos Bank, for example, only lends money to organisations whose work benefits people and the environment, from renewable energy projects to community groups. And it publishes details of all the people it lends money to so you can see the positive impact of your savings for yourself.
In terms of investments, options have been available for conscious consumers since the 1980s. Socially Responsible Investment (SRI) offers choices ranging from funds that avoid sectors like the armaments and tobacco industries, to portfolios focused on companies with a social benefit – such as recycling or social housing. You can also choose to invest directly in progressive organisations. For instance, in 2004 Triodos Bank raised #5 million for Fairtrade pioneers Cafedirect in a high profile ethical share issue. It’s a practical way that investors can get closer and provide support to a business that they want to flourish.
It’s true that, like Fairtrade and organics, sustainable financial products can cost more than their mainstream alternatives. But this is balanced by the ‘social return’ you get from your money.
Ethical finance may be just a small part of a colossal monetary system that dominates our world. But it’s an increasingly popular and influential movement.