I live in the UK. I have been following the FIRE life for 20 years without ever actually hearing the term until recently. Of course, there are many ways to FIRE and I don’t think mine is particularly conventional, although I do live quite frugally as well.

I have almost all my investments located in funds and schemes that I consider highly ethical. So what does “ethical” mean for me? To me it is obvious that I want to put my money where my mouth is, so if I have spent years campaigning for social justice and for people instead of profit, I would be a complete hypocrite to invest in highstreet banks which invest in the arms trade, large supermarkets which are destroying local businesses, mining companies causing environmental devastation, soft drink companies murdering trade union activists … that is really just scratching the surface, I could go on.

The crazy thing is that with the traditional negative screening process for a fund, most of these companies are still seen as viable places for an ethical fund to invest, because they are not seen as directly harming people, even if their legacies are atrocious. That strips the word ‘ethical’ of any real power for me. In consequence, you might scratch your head and ask are there any actually ethical projects out there to invest in. I believe there are and we’ll come onto them below.

Negative screening tends to block funds for the following reasons:

  • Alcohol manufacture
  • Animal Rights abuses
  • Arms manufacture
  • Gambling operations
  • Human rights abuses
  • Nuclear power
  • Oppressive regimes
  • Predatory lending
  • Pornography production
  • Tobacco manufacture

The screening might typically say that if over 10% of the company’s revenue comes from one of these things, the fund is blocked. Personally I don’t disagree with this blocklist except for alcohol production since i believe all drugs should be available to those who want them. I drink alcohol myself and do have some drinks trade holdings actually, but i don’t see them as particularly ethical or non-ethical. However, since tobacco causes cancer i’m happy for that to be excluded (my perspective being that drugs should be legal but that doesn’t mean i need to invest in them). Moreover, a highstreet bank invests in companies which do all the things on the negative screenings list even if it doesn’t do them directly, so i see nothing ethical in their approach above the use of buzzwords.

Anyhow, negative screening, whilst useful, seems like pretty much the least that can be done. I rather invest in things which are actually making a difference, not for example in Facebook, a corporation that doesn’t give a shit about my personal data except for selling it on. Yes Facebook doesn’t murder people or torture puppies directly, probably it gives you a good return, but they are creating a world in which corporations own all our data and I don’t want that. Plus I don’t have Facebook myself.

I therefore apply positive screening, because I want to invest in companies and groups attempting to make the world a better place to live in by. I realise here I am supposed to give my own criteria (or if i’m like the so-called ethical funds supply some guff and claim you can find more details in the prospectus) but actually I prefer to assess each investment individually to see if it works for me. Still though, there are some trends such as:

  • supplying renewable energy (solar/wind/hydro)
  • turning pubs into inspiring community projects
  • setting up housing cooperatives and social centres based on anarchist principles
  • providing the infrastructure to facilitate these things

I am also interested in microfinance projects helping small businesses to get going and fairtrade schemes in the Majority World but I find it more important lately to focus on more local matters.

For me it’s a good way to sleep a bit easier knowing that my money, invested directly in projects in the form of bonds, loanstock and shares, or indirectly via bonds, ISAs, savings accounts and SIPPs, is doing what i see as good, rather than harming people and animals.

Here’s a current cherry-picked (2018) list:

  • For my banking, I use Cooperative Bank and Triodos Bank. Triodos are a huge inspiration for me, I also have an ISA with them and I invest in the bank itself through Depository Receipts.
  • Triodos also had a great renewables bond which has spun off to a different company called Thrive.
  • I have shares in Good Energy, a utility company I used to use which provides 100% renewable UK energy.
  • I have ecobonds with ecotricity, another UK energy supplier which gives 100% green electricity and frack-free gas.
  • I have several more bonds in individual wind and hydro projects via Energy4All.
  • I also invest in Brighton Energy Coop, which installs solar projects.
  • Then I have loanstock supporting a few different housing coops, social centres and community pubs to set themselves up.
  • I have 12 solar panels on my house and make a few hundred quid every quarter from the FiT scheme.

It is important for me to be the change i want to see. I gusss that makes me a “hard” ethical investor, since the term ethical has been stretched so far it needs a moniker attached to stay relevant. Likewise with ‘green’ and ‘sustainable.’

To breakdown my decision making, these factors are important. So this is my positive screening, on top of the obvious negative screening…

  • Is the fund/project local?
  • Does the project support the type of things I am interested in (renewable energy, community projects, social change)
  • Does the project have at least an engagement with sustainability in the sense of both talking about it in the prospectus AND doing something tangible
  • Is it transparent? Can I easily find out the information I want to look at to confirm the other factors?

As just one example, the Triodos funds fit these criteria very well. Most ‘ethical’ funds on the other hand would fail this stringent test on all criteria.

So now you know a bit more about me and where I am coming from when thinking about investment. It’s taken me a long time to get to this point and I’m happy to see more and more opportunities for “my sort” of ethical investing.

Plans for the future include:

  • Have a look at Ethex
  • Make an Abundance ISA
  • Plan my SIPP
  • Assess if i can already live off my dividends