This site will look much better in a browser that supports web standards, but it is accessible to any browser or Internet device.

Autumn 1998 - Issue No. #32 (p.17)

Ethical Investment:

Putting Your Money Where Your Mouth Is

by Alex Routh

JJ International, Okayama, Japan

Money makes the world go round and filthy lucre is the root of all evil. To those who believe in creating institutions that benefit the world and contribute to improving the environment and the human condition, this is all too true. It is the profit-driven arms industry which has sold anti-personnel mines to all of those oppressive regimes and armed them to the teeth. It is the short term profit-oriented goals of loggers and fishers that have caused environmental devastation in many parts of the world by raping the environment. Profit in the world of Global Issues is a dirty word simply because it has been such a powerfully negative force. What if we could turn this incredible power to good ends?

Ethical investment was an idea conceived 20 years ago which allowed people to save their money in a way consistent with their beliefs. The idea was scoffed at by pure capitalists because such investments would have to give up golden opportunities and produce inferior returns. Ethical investors would be poor cousins investing not to maximise profit but to subsidise inefficient enterprise. Have the predictions been borne out? What has been the experience of ethical investment?

The purists aren't laughing any more because ethical investment funds have done very well, some outperforming the S&P 500. One example is a fund called Stewardship, offered by an enlightened UK company called Friends Provident (FP). Friends Provident was founded in 1832 during the industrial revolution by activist Quakers who wanted to create a society that would invest the savings of the poor and provide life insurance to ameliorate the condition of the destitute. Today, they're a huge institution and are still in the same business. They launched the Stewardship fund in 1984 and it has achieved an outstanding 15.6% average annual rate of return over the 14 years since its inception.

What are the criteria for investment in an ethical fund? Let's look at Stewardship's positive and negative criteria as an example:

Positive Criteria:

  • Basic Necessities: firms that supply food, water, light and clothing
  • Products of Long Term Benefit to Society: medicines, safety equipment
  • Conservation of Resources: renewable and responsible forestry & energy firms
  • Environmental Improvement: pollution control technology firms and companies that have a good environmental policy

Stewardship also looks for companies that are equal opportunity employers, have high employee welfare standards, provide training and education, show strong community involvement and are generally open about their activities and policies.

Negative Criteria:

  • Environmental destruction
  • Unnecessary exploitation of animals
  • Trade with oppressive regimes
  • Exploitation of third world countries
  • Tobacco or alcohol production
  • Nuclear Power
  • Weapons manufacture
  • Gambling
  • Pornography

Turning the power of profit to good ends is a way of denying capital to users that would make the world worse off and funnelling it into positive applications. This is a Global Issue and one increasingly getting the attention of the general public.

The Stewardship fund just topped the UK 1,000,000 pound mark and is the most successful ethical fund in the UK. It is the only ethical fund available offshore, tax-free to expatriate teachers through FP's Guernsey office. FP has monthly pension and savings plans which can be funded free by credit card from anywhere in the world.

Everyone needs to have a nest egg invested in the stock market if they are 10 or more years before retirement since bank interest rates won't grow enough to provide a retirement income or outpace inflation. Think of the teacher's pension plan you'd have in your home country. It wouldn't be earning low interest in a bank. Stewardship is an ethical alternative you should consider

If you want to put your money where your mouth is, Stewardship is now available in Japan and Asia. I'd be happy to send you information on the fund and its activity.

by Alex Routh


Please note that the most recent issues of the newsletter are available to subscribers only. Please check our subcription page at for more details about subscribing.

You can search the site by using the above tabs or click on the links below.

Kip A. Cates, Tottori University, Koyama, Tottori City, JAPAN 680-8551
E-mail: Work Tel/Fax: 0857-31-5650