The recent failures of the banking system have resulted in the increasing profitability of the ethical finance sector and a growing interest from investors in ethical finance.
UK-based asset manager F&C is the latest to announce new ethical finance initiatives, with a focus on Islamic finance. They are to launch a new fund that will combine socially responsible values with more specifically Islamic values.
The new fund, which is to be launched by the end of the summer 2009, will be the first of its kind, according to Humayon Dar, chief executive of BMB Islamic, F&C’s consultants. It will tap into a UK market worth billions, with the potential for expanding into other Western markets.
"The ethical and responsible (aspect) is a contribution of the West. This is actually the way forward anywhere, not only in the UK," Dar said. “The potential is huge.”
There are a number of ethical finance companies currently doing very well, both in the personal and business markets, including:
Established 30 years ago, Triodos Bank operates according to a very traditional banking model, and pledges not to take undue risks with its customer’s money. What isn’t so traditional is that it actively engages in ethical issues, pushing for social, environmental and cultural change wherever possible.
Triodos is the only commercial bank that publishes a complete list of its investors. Its sustainable approach provides for transparent, secure banking services.
Climate Change Funds are sprouting up across the range of financial institutions. While being fundamentally different from classic ethical investments funds they seek to invest in companies involved with mitigation or adaptation to global climate change.
Virgin Money are now providing an ethical investment opportunity in the form of their Climate Change ISA. The Virgin Climate Change Fund is a stocks and shares ISA that aims to deliver a top performing fund by investing in green companies that are environmental leaders in their industry. The companies invested in have been selected both for their profitability and their lighter-environmental footprint.
RedAid’s Lend-to-Charity scheme means customers can do some good with their money while earning a decent return - up to 10% in fact. It is a registered UK charity that exists to provide sustained financial support to charities in the developing world that bring relief to those suffering from extreme hunger, poverty, illness and hardship.
Investors lend money to RedAid. RedAid then use the money to bring relief wherever the need is greatest, quickly and effectively, often through microcredit schemes. In return RedAid will pay a 10% dividend to investors for your investment, which is raised from separate fundraising initiatives or from the sustainable micro-businesses that they operate.
If making a big return is not so important for you, you can also opt out of receiving your interest, in which case it will be reinvested back into one of their life-changing projects.