Some ethics with you ISA?

ISA season is upon us again and with the April 5 deadline for using this year's tax free saving allowance fast approaching, banks are as eager as ever to get their hands on this last-minute cash.

But as we search around for last minute ISA deals, how many of us stop to think about the impacts our investments are having on the world around us? How many of us are, unwittingly, investing our ISAs in the arms industry, in needless polluters, oppressive regimes or other companies whose objectives are at odds with our own?

The answer is the vast majority of us, though this needn't be the case. The options for investing your ISA are multiplying all the time; and this needn’t mean sacrificing financial performance. There are now around 90 ethical funds available – the majority of which come with an ISA wrapper.

The old adage that investors have to "pay" to go ethical in terms of poorer financial performance no longer holds true. Over the last few years some ethical funds have outperfromed their non-ethical peers.

But what kind of companies do green and ethical ISAs invest in? This depends on the ISA’s ethical policy. Some may aggressively screen out heavy polluters, arms companies and animal testers. While others take a ‘best of sector’ approach and may invest in the oil and gas sector but will actively seek out companies that have a better record on the environment and human rights than others in their sector. This can include investment in dynamic green technologies, such as renewable energy, which have the potential to tackle huge global issues such as climate change whilst generating a very healthy. Additionally, some funds may also seek to improve the social and environmental performance of companies through a process of proactive engagement

EIRIS’ YourEthicalMoney.org webiste has a full list of all the various green and ethical ISA options available.

So, when choosing your ISA this year, think not only of the potential financial reward, but of the social, environmental and ethical return.

- Mark Robertson