When saving for retirement, most of us share the goal of growing our pensions as much as possible. But many of us want to make sure we’re doing it with our morals in mind. The good news is you can do both.
There are lots of ways to make a difference for future generations through the way you invest. But the two main approaches are ethical and sustainable investing.
Different ways to invest with morals in mind
Ethical funds use negative screening. This means they rule out companies that do harm, such as tobacco producers or alcoholic drinks makers. The exact activities they screen out vary from fund to fund though, so you'll need to read each fund's prospectus to learn more.
As the global population grows, it’s likely investments in new technologies will be needed to meet the demands for energy and clean water. That's where sustainable funds come in.
They invest in firms that contribute to society. No area is specifically off limits. Instead, the manager looks for companies acting responsibly. That might include companies whose products can be recycled, or companies that develop green technology. This is positive screening.
Research has shown that a company’s share price tends to decrease if there’s negative environmental news attached to it, and increases if there’s positive news on a company’s environmental behaviour. But there are lots of other reasons why investments can rise and fall in value too, so you might get back less than you invest.
Some funds combine an ethical and a sustainable approach. They invest in companies that contribute to society, whilst also making a commitment to avoid companies doing things some may find unethical, such as making weapons or selling pornography.
You can read more about these approaches, and learn about other ways to put your principles into practice through the way you invest, in our guide to Ethical and Sustainable Investing.
Read our guide to Ethical and Sustainable Investing »
Everyone's approach to ethics and sustainability is unique. So before investing, you'll need to check each fund’s investment criteria and make sure it’s consistent with your views.
How to start investing in your principles
We’ve put together a selection of ethical or socially responsible funds to help you get started.
Once you’ve made a decision on where to invest, you can log into your pension account to make your investment choices. If you don’t have online access to your pension yet, call us on 0117 314 1795 to request a PIN.
Remember, this information is not personal advice. If you are unsure of the suitability of an investment for your circumstances please contact us for advice.