Avoid so-called ‘ethical’ investments and stick to positive ones, says founder of new investment website
The founder of a new website showcasing ethical investment opportunities says investments labelled ethical often aren’t, but there are plenty of opportunities for investing in good businesses.
According to Jamie Hartzell, founder of new ethical investment website Ethex, people who want to see their money used for good should invest ‘positively’ because ethical investments are often not what they seem. Hartzell believes that managers of so-called ‘ethical’ investment funds are actually putting people’s money into mainstream banks and gas companies.
Speaking at a debate during National Ethical Investment Week, which ran from 14 October to 20 October, Hartzell (who is also founder of The Ethical Property Company and director of Fairtrade olive oil company Zaytoun) said: “Few people realise that almost all ethical investing is about what you don’t invest in, not what you do. This is called negative screening and it works like this: your advisor or fund manager asks you what you object to – armaments, pornography and so on – and then tries to make sure you don’t invest in that, though they can’t actually guarantee that a small portion of your money won’t slip through to such things.”
“Positive investing is what we might naturally imagine ethical investing to be”
Hartzell told the 40-strong audience at the Tea & Debate event in London’s Kings Cross that negative screening produces some “strange results” and that three of the most popular investments for ethical fund managers across Europe are BG Group (the world’s largest gas company, producing 186,000 barrels of oil-equivalent a day), Nestlé, and HSBC Bank.
Hartzell stated that looking more closely at the details of negatively screened funds would show that they’re far from “doing good” with money. According to Hartzell, one fund with the word ‘sustainable’ in its title holds a major investment in a shale oil exploration company. “Another invests in GE,” he added, “They justify this on the basis that arms are only 0.5% of GE’s turnover, but in such a multinational giant, that amounts to €830 million of arms sales a year.”
However, Hartzell did note that ‘positive investing’, which allows people to bring their money more closely in line with their values, is on the rise. And people can invest for as little as £10. “Positive investing is what we might naturally imagine ethical investing to be,” said the entrepreneur. “Putting our money into businesses that have delivering a social or environmental benefit at their heart, alongside the financial return.”
“There are a growing number of opportunities to make investments in fair trade, community renewables, charities, sustainable buildings, developing world micro-finance and much more. There are now also a small number of funds that invest in a combination of companies which offer a range of solutions to climate change and health issues. These are investments that one can get truly excited about. What’s more, it is often possible to invest directly in the company, making you a member of the business and also avoiding the middleman’s fees,” explained Hartzell.
The entrepreneur aims to launch Ethex at the end of the year. Ethex will compare and evaluate ‘genuinely good’ ethical investment opportunities and offer a broker service.