Adviser Rant: Ethical investing is devilishly difficult

Martin Bamford, managing director, Informed Choice

Investors with ethical or socially responsible investment preferences face a really tough challenge meeting their goals, as the Archbishop of Canterbury discovered.

After claiming the Church of England would try to force Wonga out of business by supporting credit unions, Archbishop Justin Welby claimed to be “embarrassed” and “irritated” that the Church had invested indirectly in the controversial payday lender.

In spite having an ethical investment advisory group, the Church of England inadvertently invested in US venture capitalists Accel Partners, which led a fundraising round for Wonga in 2009.

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Ethical investment is and always has been very challenging.

Every ethical investor has different preferences, with many content to allow fund managers to make decisions and simply not invest in anything that might be considered overtly ‘evil’.

Those investors who do have ethical investment preferences should spend time with their advisers discussing, in detail, the restrictions they want to see in place and how they wish to see their portfolios allocated in order to do good in the world.

Even then, as the Archbishop has learnt, there are no guarantees that something unethical will not slip through the net.

Martin Bamford is managing director at Informed Choice