Eliminate the negative, accentuate the positive.

Ethical Investment comes of age

Socially Responsible Investing (SRI) used to be considered the preserve of the more 'philanthropic' investor. Returns from ethical investments were at best meagre and portfolios were insufficiently diversified. But times have changed. SRI has truly come of age. Now your clients can invest with a clear conscience and enjoy all the attendant capital growth potential that other investment sectors offer.

Time to take a fresh look at the Credit Suisse Fellowship Fund

There has been a fundamental shift in attitude towards SRI. In the past, fund managers were more concerned about identifying what not to invest rather than finding proper opportunities. That's no longer the case. There are more opportunities and those opportunities can now be assessed on the usual fundamentals such as value, growth v income and sector etc. As a consequence, SRI portfolios are now more diversified than ever before and can be as actively managed as funds are in other sectors in the pursuit of capital growth and/or income.

A broader SRI mandate = more investment options

One of the main reasons why fund managers now have more scope is the way that SRI has been 'sliced and diced'. Once there was only one philosophy and that was 'Ethical'; now there are four:

Ethical - the pioneer of SRI, ethical funds take account of moral values in their selection criteria

Sustainable World - funds which favour stocks that are involved in conservation or environmental activities.

Socially Responsible - funds which focus on human rights issues

Ethical by nature - funds which invest with an ethical and socially responsible bias where for example the focus might be on businesses seeking to improve the environment, or businesses involved in healthcare.

It's important to emphasise that greater choice does not mean having to sacrifice core values. In fact what each of the four philosophies has in common is that their managers will avoid investing in businesses involved in arms manufacturing or sales, nuclear power or related technology, companies that abuse human rights and businesses that use animals for non medical testing.

Business cleans up its act = more investment options

Having a larger pool to fish in also to do with the changes that businesses are making to the way they do business. In the past there was a paucity of qualifying stocks - too many businesses were damaging the environment or harming people in some way or other. That's no longer the case. Businesses throughout the western world are adopting more environmentally friendly business practices and having to consider the ecological impact of their activities. There are also more and more businesses emerging that don't pollute the planet, or make products which damage people's health in any way. This is another reason why the investment universe for SRI has grown significantly and we believe will continue to do so.

More change, more customers, more profits

Companies that qualify as SRI options are, by definition, forward-looking. They also share a belief in the operational and financial transparency. In other words, what you see is what you get and that makes life easier for stock pickers such as us. And as environmental legislation increases, those companies that are 'ahead of the game' will be better placed to capitalise on those changes. For example, companies that have or are intent on reducing their carbon emissions are less exposed to litigation than companies who continue to pollute. For some businesses social and ecological legislation can mean high costs; for others more legislation means greater opportunities.