An ethical investment fund is a mutual fund or ETF (exchange traded commodity) that aims to achieve positive returns for investors while prioritising environmental, social and governance considerations (known as ESG) in its decision making.

Fund managers will only invest in companies that adhere to a set of criteria or hit a certain ESG rating. They will look to avoid investing in companies or areas that harm the environment or wider society such as fossil fuels, tobacco and firearms.

There are a number of ways that investors can invest ethically either by using their own personal values, using a widely referenced industry ESG rating system (e.g. MSCI ESG score*) or seeking professional independent advice from an expert.

It can come down to personal choice as investors will hold their own set of personal values and opinions as what makes an ethical company or product.

‍*MSCI ESG Ratings aim to measure a company’s management of financially relevant ESG risks and opportunities.

Investing money ethically is about considering values as well as potential returns. You can look to invest in areas you deem to be worthy such as climate change, workers rights and gender equality and avoid areas like firearms, tobacco and gambling when selecting companies and funds to invest in.

Definitions of what are deemed to be ESG and ethical funds can be broad: so it’s important to do your own research to choose the investments that are right for you.