The UK’s first ethically screened investment fund was launched by the former Quaker UK Life Office Friends Provident in 1984. The fund’s remit was to support companies that made a positive impact on society.
Today, a growing number of investment funds specialise in socially responsible investing. PensionBee offers three socially responsible pensions: the Future World Plan, the Fossil Fuel Free Plan and the Shariah Plan.
Examples of socially responsible investing
There are two ways of looking at socially responsible investing; through the way companies operate and the industries they operate within.
The way companies operate
The way a company operates will determine whether some investors consider them to be socially responsible. The types of company practices worthy of a socially responsible investment fund’s investment may include:
- High employee welfare standards
- High consumer protection standards
- Adequate board/senior-executive race and gender diversity
- Ethical supply chain partners (eg. factories that provide suitable working conditions)
Industries companies operate within
As well as examining whether a company is deemed a socially responsible investment, funds may exclude companies automatically based on the industry they operate within. These may include:
❌ Fossil fuels
❌ Adult industries
But while many investors and funds avoid certain types of companies, others proactively seek to invest in companies that are committed to working towards furthering society in a responsible manner. These types of companies might include:
- Clean technology
- Environmental sustainability
- Social justice
- Accessible healthcare
Types of socially responsible investment funds
To cater for the broad range of values and goals held by investors, investment funds approach socially responsible investing in a variety of ways. Some simply exclude companies that don’t meet a certain set of criteria (such as board diversity), while others have a narrower investment strategy (such as only investing in Shariah-compliant companies).
All approaches seek to make a positive financial return. And academic studies have found that more sustainable investing can lead to higher returns.
Socially responsible pensions
When saving into a pension, you can choose a pension fund that aligns with your values as well as your long-term goals.
- Fossil Fuel Free Plan: Excludes the fossil fuel and tobacco sectors while only investing your money in companies aligned with the Paris Agreement goals.
- Future World Plan: Invests your money into companies that pledge to move to an environmentally-friendly economy.
- Shariah Plan: Invests your money only into Shariah-compliant companies. Investments are approved by an independent Shariah committee.
For more information, read: Ethical and ESG investing and its impact on pensions.
As always with investments, with a pension your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Last edited: 11-03-2021