A ‘label’ certifying ethical investments could boost consumer confidence in them, a senior Fairtrade director has said.
Speaking at the Investing Ethically conference on 17 October, Harriet Lamb CBE, executive director of the Fairtrade Foundation, likened the idea to the Fairtrade logo on foods that certifies certain production standards.
“It might be the right time to have a mark [of ethical standards],” she said. “A lot of people have seen how some labels have driven change.” A conference delegate suggested that investors would find it easier to identify ethical funds is they were labelled.
Lamb pointed out, however, that setting, maintaining and monitoring a set of standards is not as straightforward as printing a logo on company documentation.
“A lot of people sometimes underestimate what it takes,” she said. “A label is only as good as the standards that sit behind it and the extent to which the public know it, understand it and trust it. That is a big task.”
Alan Kirkham, founding director of IFA firm Investing Ethically, said that there simply is not enough industry support for an ethical investment standard certification. “There is no room for an ethical investment mark because ethical investment still doesn’t have a unified body,” he said. “It is a great shame that we don’t have that voice.”
Phil Baker, strategic partnerships manager at Ecclesiastical, said that the main issue is that definitions of ethical funds vary so widely that it would be difficult to define a standard that fits all providers.
“All products are so varied,” he said. “To have a single badge would be as misleading as it would be helpful. Fund groups have different interpretations of what ethical means.
“The difficulty is that investors and IFAs have to look at those funds in details. Just stamping them [with a label] would be very difficult.”