Investing with a Conscience: Ethical Investing, the roots.
Updated: Dec 3, 2023
What is ethical investing ? Is it that gut feeling, the one that guides you against putting your money into something just doesn't sit well? Does it go deeper than that, do you feel an active participation in outcomes you disagree with by investing your money in certain companies or collective investment funds ? Does ethical investing mean that you want your money to do good whilst you also participate in investment returns ?
Hello, my name's Jill and I work hard to engage people with their financial planning, to invest in their future selves, to manage risk, protect what matters most and to help make a difference.
More people are asking me about ethical investing, for the funds that sit inside their pensions, ISA's and bonds. In 2023 it's a wide and varied subject covering social impact, sustainability, governance, share holder action, corporate responsibility as well as themes around climate change and gender equality, for example.
But for the moment, let's take ethical investing back to its roots and in particular to 1970's America with Dr J Elliott ( Jack ) Corbett and the Rev Dr Luther Tyson who
wanted to make it possible for investors to align their investments with their values. At the same time, they wanted to challenge corporations to establish and live up to specific standards of social and environmental responsibility. 1
At the time, there were no retail funds for people to invest in with a conscience so they set about establishing one themselves. In 1971 the Pax World Fund was the first of what is now known as an ethically screened fund. Against the backdrop of American involvement in the Vietnamese war and protests against the Napalm manufacturer, Dow Chemicals, Tyson and Corbett wanted to make sure that investors money would in no way, shape or form, be involved in funding instruments of war or be invested in companies who made profits from war.
It didn't just stop at the negative screening. Their time spent working for peace, housing and employment with the United Methodist Church gave them an additional focus for investing positively into companies involved with health enhancing activities including food, housing and healthcare. The fund also had a strong bias towards environmental stewardship.
Their ethical investment approach and stock selection / exclusion, can be traced back to the founder of Methodism, John Wesley, who in the 1780's delivered his pivotal sermon, "The Use of Money". In this sermon he called on methodists,
not to harm your neighbour through your business practices and to avoid industrial practices that are harmful to your own and to other people's health. 2
After establishing the Pax World fund, Corbett went on to found the Pax World Service a non profit, philanthropic organisation promoting international reconciliation and small scale sustainable development. Corbett was also the co - founder of the first organisation in the States to seek handgun control, The Coalition to Stop Gun Violence. 3 By the time of his death n 2003 the Pax World Fund had attracted over $1Billion of investors money. It has been subsequently bought out by Impax and is now the multi asset Pax Balanced fund with $1,817,787,671 under management. Corbett and Tyson are considered the founders of sustainable investment Stateside.
What are your pension, ISA or bond funds invested in ? Ask your adviser.
Sources:
1. Pax Balanced Fund Q&A - More than 45 years of Impact.
2. John Wesley's sermon - The Use of Money
Jack Corbett Remembered, Mourned by Pax World Family - CSR News March 27th 2003
Jill Turner is Director and Principal Financial Planner at Big Picture Financial Planning, a member of the Personal Finance Society, the London Institute of Banking and Finance and a member of the UK Sustainable Investment and Finance Association.
This article is for information and does not constitute advice. The value of investments can go down as well as up and your capital is at risk. It first appeared as a Linked in article in 2019 and has since been updated.
