Who says money doesn't talk? The growing popularity of Green investments is encouraging more people to consider an ethical approach to their pension and investment strategy. Investors are becoming aware of the fact that their investment into a company has a direct impact on the people and the environment surrounding that company.

The issues that are most common for concern are the environment, cigarettes, alcohol and supply of arms, but what about companies who have unsavoury records in human rights or equal opportunity. Sometimes these issues are not very apparent or easy to research. After all the last thing a large PLC would like made public is the fact that they are responsible for the supply of land mines that devastate hundreds of lives each year. A common way of seeking out ethical investments is to request a specialist financial adviser to find a fund which matches your criteria.

Public opinion is strengthening, people vote with their feet and are likely to request investments that meet their own personal concerns. They may wish to see a high level of ethical thinking and a proactive approach in lobbying companies to change. People have different opinions towards ethics. One person may feel that the arms industry is a valuable source of employment and export earnings. While others may see this as merely contributing to third world oppression or concerned about animal testing and specifically wish to exclude these companies from their plans.

Each ethical investment fund available on the market has its own set of criteria which clearly states which companies it aims to avoid and which it prefers. This allows an investor to choose a fund which reflects their own views.

It is important to analyse with each fund who decides what counts as ethical. Some funds rely on the fund manager. They can be trusted to manage the financial aspects of the fund, but it is important to look a little deeper at the practices adopted and that they stand up to scrutiny. A number of funds employ in-house ethical and environmental specialists and advisory committees. They are able to give more serious ethical issues the deeper consideration they deserve. They not only influence the direction of investment within the fund but also propose shareholder resolutions at an individual company's AGM. 

This of course could influence the direction of a company's policies and the way that individual company is run. The very best ethical funds should demonstrate the ability to give these issues the serious expert attention they deserve.

One of the traditional myths regarding ethical funds relates to the belief that aiming for the very highest standards of ethics and the environment has effects on business practice and hurts profits. This leads to the belief that a fund based on ethical strategy opposed to a pure financially driven process is likely to under perform.

There is growing evidence that a good track record of corporate ethics are key influences on long term shareholder value. An example of this in action could be where a company has invested money in energy efficient machinery in the short term where savings in fuel and power bills will result in the long term. 

There is also the factor of perception. How can a company that is not making all of the savings possible to their costs, along with the fact that they may not be treating their local environment with respect, be well managed. I'm sure you'll agree that you would rather see your money supporting a strong management team.

Indeed some companies are likely to advertise their relative strengths and even make a report on their environmental efficiency in any one year. This makes it easier for shareholders to determine performance not just in a financial way, but also in the form of cost to the environment. This is not compulsory at this moment but with more investor pressure it could be. These reports could indeed give vital clues as to which companies are positioning themselves for the future and in turn giving themselves every chance of profits in the future.

With more information available and adoption of better stock selection processes, ethical investments can only get more popular and more rewarding for the investor. These rewards are not just financial, the wide range of issues that are considered as ethical are expanding. Having the knowledge that your money is avoiding child labour, pornography and oppressive regimes is a return in itself. 

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