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what is cause-based investment or social investment?

Socially responsible investment isn't confined to shares traded on the world's stock exchanges. Many investors prefer to back particular projects or causes. This type of directed investment is sometimes described as 'cause-based', 'alternative', 'social' or 'mission-based'. Investors should be aware that many cause-based investments specifically offer a below-market financial return in order to allow the delivery of a higher social return, bringing benefits to the causes they support. This type of investment take many forms but typically helps encourage regeneration by providing cheaper loans to enterprises in under-invested communities, assists organic farmers during their conversion period, invests in the regeneration of tropical hardwoods or helps producers in the developing world to export their goods to fair-trade markets. For example, the Aston Reinvestment Trust in Birmingham uses investors' money to help regenerate the local economy and the Newcastle based Shared Interestsupports projects in developing countries. In many cases, the projects involved would not be able to get funding from anywhere else. The cause-based sector is currently dominated by financial institutions such as Triodos Bank and the Ecology Building Society, although it also includes ethical companies who raise money directly from stakeholders by issuing 'ethical shares'. Traidcraft launched this idea a decade ago, followed by the Centre for Alternative Technology. The Ethical Property Company which buys and develops properties for charities and community projects recently sold its millionth share. For more information visit www.eiris.org and download their 'Guide to Cause-based investment (1999)'

 

how do I buy shares directly in socially responsible companies?

An SRI financial adviser should be able to advise you on buying shares in ethical, socially responsible or environmentally friendly companies. Some ethical investors also buy shares in companies they wish to change and then use their rights as shareholders to put pressure on companies to improve their policies and practices. However, unless you are familiar with buying individual shares, this can be time-consuming and expensive. In this case it may be better to ask your financial adviser to recommend a socially responsible fund where the manager can do the research, stock selection and management for you.


Finding out which companies have ethical or socially responsible policies - Many companies have strict disclosure policies, which means information about their business practices is freely available to the public. You can access this on websites or company literature. Unfortunately, not all companies do this and without access to this information it's difficult to make an informed choice about investing in the company. Organisations such as Amnesty International, Greenpeace, the World Trade Organisation and EIRIS, the Ethical Investment Research Service, can provide you with information or point you in the right direction. EIRIS often advises fund managers on the activities of global companies. It has also established key criteria for assessing various business practices and how these can affect human rights or the environment. For more information visit www.eiris.org and download their 'Guide to Ethical Share Ownership (2001)'.

 

where can I get more information on socially responsible investment?

The majority of socially responsible investment business is conducted through authorised financial advisers, and that should be your starting point. Not all advisers have specialist ethical investment knowledge and we strongly recommend that you find one who does. Your SRI financial adviser can find out all you need to know and advise on the right products for your needs.
In addition there is a wealth of information available on socially responsible investment. Here are a few websites to start you off (Economie does not endorse these websites, nor do we take any responsibility for their content):

 

* Ethical Investment Research Service www.eiris.org - Carries out independent research into companies from the UK, continental Europe, North America and the Asia Pacific region, covering areas including military, environmental performance, human rights and animal testing.
* www.trustnet.com - Publishes comprehensive lists of ethical funds and trusts and their performance.
* Investment Management Association (IMA, formerly AUTIF) www.investmentfunds.org.uk - Has a socially responsible investment fact sheet, and lists positive and negative criteria.
* UK Social Investment Forum www.uksif.org - Promotes SRI in the UK.
* Ethical Junction www.ethical-junction.org - The ethical business directory for the UK and Ireland, with information on nearly 1000 businesses offering ethical services and products.
* New Economics Foundation www.neweconomics.org - A charity and independent think tank which works to construct a new economy centred on people and the environment.
* Ethical Consumer www.ethicalconsumer.org - The UK's alternative consumer organisation looking at the social and environmental records of the companies behind the brand names.

 

Ethical Investment Advice

 

 

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