This from Which? Sorry long and slightly dull but no good doing a link as you have to be a subscriber. Might be interesting to others on the lookout for this - though no concrete advice...
The fund manager decides which companies? shares to buy, based on their trading performance and future potential. Ethical funds also invest using these criteria but choose from a smaller selection of companies whose activities are ethically acceptable. This is called ?screening?.
Screening
- Negative screening is where funds exclude companies that deal, for example, in arms, pornography, animal testing or oppressive regimes
- Positive screening is where funds invest in companies that make a positive contribution to communities or provide solutions to environmental or social problems. The terms ?light green? and ?dark green? are also sometimes given to ethical funds
- Light green funds refer to those which exclude companies involved in activities, such as animal testing and the arms trade, but may invest in mainstream companies that improve their environmental or social policies
- Dark green funds, on the other hand, use the strictest ethical criteria. These funds usually exclude investing in the largest companies in the UK
Checking where the money goes
You can check where funds are investing their money on websites such as Trustnet and Morningstar. The UK Social Investment Forum?s website also gives information about ethical investments and provides links to various ethical funds.
But the best way is to get the annual report and accounts of the company or investment fund in which you are interested in investing, and ask for its statement of ethical principles to see whether they match yours.
Independent financial adviser Robin Keyte says: ?I always encourage clients to be pragmatic when it comes to ethical investing. Depending on how strict their ethical criteria are, how much risk they can take, how long they can invest and whether they need income or growth, they are unlikely to find a perfect match to their requirements and often need to compromise a little.'
He continues: 'However, that doesn?t mean there is no choice or that the choice is poor. There are good, bad and average performers in the ethical market, just as in any market.?