In its report* on ‘Global Warming of 1.5°C’, The Intergovernmental Panel on Climate Change (IPCC**) stated that, during the last three decades, “global warming has continued unabated, and we have witnessed an acceleration in sea level rise. Emissions of greenhouse gases due to human activities, the root cause of global warming, continue to increase, year after year.”

Later in their report they state that “The range of mitigation and adaptation actions that can be deployed in the short run are well-known: for example, low-emission technologies, new infrastructure, and reallocation of investments and human resources towards low-emission assets.”

Invest wisely (via an effective, ethical investment manager) and you’ll help promote these initiatives, do your bit to suppress further global warming, and, ultimately, work towards a more secure future for all.

* Source: www.ipcc.ch/sr15/download/

** The IPCC is an intergovernmental body of the United Nations responsible for advancing knowledge on human-induced climate change

It has long been known that carbon dioxide traps heat. The more of it we add to the atmosphere, the greater the rate of global warming. Low carbon solutions refer to those that reduce the rate at which carbon dioxide is produced, or even work to reduce it.

The most obvious example to help mitigate the production of carbon dioxide into the atmosphere is to invest in renewable energy. But it can include wider examples such as businesses making stringent moves to manufacture things more efficiently and with fewer materials, those actively recycling materials back into manufacturing processes, investing in innovative ideas such as carbon capture plants or promoting public transport over private transport.

A true, low-carbon investment fund will target and promote both conventional businesses looking to improve their carbon footprint, as well as support those innovative ones enabling this.

Renewable energy is captured energy that comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat. Recent advances in technology and policy continue to allow renewable energy and energy efficiency to play major roles in displacing fossil fuels, helping to meet global energy demand while reducing carbon dioxide emissions.

Beyond fossil fuel replacement, encouraging the growth of renewable energy also forms a vital part of most nation’s energy security, which is a prerequisite for economic growth. It offers lower financial and economic risk for businesses through a more stable and predictable cost base for energy supply.

Investing in renewable energy is, therefore, vital on many fronts, and you would be hard pressed to find an ethical investment fund nowadays that doesn’t have at least some exposure to it.

Air pollution can have a substantial impact on health.  Airborne pollutants in the form of invisible, harmful particles can lead to cardiovascular and respiratory disease, lung cancer and even premature death.

Water pollution has damaging effects on the environment, humans, plants and animals. It occurs in many ways, including microplastics entering the ecosystem and spills or leaks from oil and chemical containers and plants. Tackling air quality and water pollution saves lives and helps mitigate climate change.

Business and industry have a key role to play. Both are contributors and solution-providers; making them essential to lowering pollution, building innovation and showing governments that fixing pollution and economic development aren’t mutually exclusive.

A skilled, ethical investment manager will recognise this and take steps to promote businesses that tackle these issues and expose and confront those that don’t.

Health and safety considerations fall into two camps from an ethical investing perspective.

Firstly, all workers are entitled to work for businesses and organisations where risks are properly controlled. Under UK health and safety law, the primary responsibility is down to employers, and they have a duty to consult with their employees, or their representatives, on health and safety matters. Where overseas territories are concerned, for example where factories are based, the law may be different. Regardless, an ethical investment manager should only consider investing in businesses that uphold high health and safety standards wherever they operate.

Secondly, health and safety considerations can relate to investing in specific businesses and industries that act to improve people’s quality of life. This may be via medical, technological or educational advances. A decent ethical investment fund will often have a reasonable number of holdings within its portfolio of this type.

The ethical investment movement in the UK first gained traction in the 1980s when conscientious investors wanted to avoid supporting oppressive regimes. It soon grew to cover other sectors including tobacco and gambling, and later integrated poor environmental practices.

Over the years, a desire to avoid and/or influence “bad business” has matured. Investment approaches moved on from this blunt approach to be more specific on a business-by-business basis, and to address certain themes that, for example, a business in a “good” sector, could still suffer from being poorly run.

Another example could be where, an environmentally positive public transport business which finds itself subject to something like corruption, anti-competitive behaviour or poor employment practices is still a bad business.

Sounding out businesses that suffer from such ills and promoting those that act to combat them is all part of a modern, effective ethical investment process.

Human rights can take various forms: civil, political, labour, economic and social rights. For a business, such a diversity can sometimes be challenging to accommodate and monitor, especially in countries with weak standards and expectations.

Nevertheless, a reputable business that chooses to operate in such countries, either directly or as part of their supply chain, should adhere to, promote and enforce certain standards from a moral stance. It also makes sense from an economic stance too. For example, if human rights issues are poorly managed it could lead to a damaged reputation, litigation, extortion or lost production.

A responsible business should put in place effective human rights policies, systems and reporting processes. They should encourage those in weak governance zones to demonstrate their commitment to improve, and / or exclude those who don’t address the above.

Nowadays, more of us care just as much about how goods are produced and how services are provided as we do about the goods and services themselves.

Businesses are ever more alert to this too. Not only as it is ethically right to do so, but also as any evidence of mistreatment can be disastrous for their reputation.

A good investment manager will focus part of their evaluation of a business on labour standards. What may immediately spring to mind are factors such as working conditions, hours worked and child labour. However, good labour standards should go beyond this. Questions can be asked about medical insurance, pensions and their maternity and paternity policies.

Good practice is to include effective and measurable corporate codes, to regularly survey staff and react to feedback throughout the entire supply chain.

A large proportion of our clients are vegetarians or vegans, but not everyone in the world is. The majority of farmers aren’t “bad people”, they are just doing their jobs, and many are deeply ethical themselves. So, we must accept that most ethical investment funds will invest in food manufacturing and distribution businesses which include meat and dairy production.

With this in mind, only investing in businesses that are strongly committed to the highest levels of animal welfare is imperative. They must follow strict animal welfare policies and standards which go beyond legal requirements and are implemented robustly and structurally monitored.

Using services such as FAIRR (Farm Animal Investment Risk and Return) and BBFAW (Business Benchmark on Farm Animal Welfare) helps ethical fund managers establish which ones are acting responsibly before adding any to their portfolio.

Discriminating against employing someone because of their race, sex, physical ability, background or sexual orientation is clearly wrong and, in most cases, illegal.

Studies in these areas often conclude that a well-diversified team or organisation outperform those that aren’t. Different backgrounds and cultures provide a balance of voices and a diversity of thought that strengthen an organisation.

A good, ethical investment fund manager will look to recognise and assess an organisation’s diversity and inclusion approach. For example, is the percentage of women and / or those from ethnic minorities that hold board positions reasonable? Do they run diversity and inclusion training or mentorship programs? Is there the flexibility to celebrate religious events equally?

The greater the level of evidence of these kinds of initiatives, the more likely that a particular business will end up in an ethical investment portfolio.

Corporate Social Responsibility (CSR) is a self-regulatory business model practiced by large and small companies. It allows them to be socially accountable to their stakeholders and the public. By adopting clear CSR strategies, companies accept responsibility for their impact on society and include things such as philanthropic gestures, ethical labour practices or employee engagement.

In developing such a strategy, businesses may make a commitment to the likes of the UN Global Compact, the UN Sustainable Development Goals and associated global frameworks.

They should examine their efforts and publicly publish their findings, always striving to develop and promote those aspects that work well and improve those that don’t.

A good investment manager will examine and be able to assess a business’s CSR policy to ensure that it contains genuine, positive measures which are central to their core operations.

We have no problem with people being well paid. In fact, it would be hypocritical if we did as we specialise in advising the conscientious wealthy. However, where pay is excessive, linked to encouraging people to take unreasonable risks, or has a knock-on effect on those further down the earnings scale, we believe it then becomes unacceptable.

A good ethical investment manager will question any business about their pay practices. For example, it is now becoming commonplace to publish the ratio of the highest paid worker to the lowest paid. Where this becomes extreme, the level of remuneration can be viewed as excessive and be open to questioning.

A good ethical investment manager will question businesses with ratios above a pre-determined limit, especially where they also employ a large proportion of low paid workers.