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Ethical Pensions

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 MeMeMe 26 Feb 2019

So I've got some money sat in a Prudential private pension fund that I contributed to in a previous employment.

It's slowly dawned on me that I have no idea what that money is invested in and is likely invested in all sorts of things that I disapprove of. So I'm looking into seeing how I can find out what it's invested in and will likely try to move it into more ethical investments.

I guess 'ethical' is pretty subjective but does anyone have any experience of ethical pension funds or anything they could personally recommend? 

It seems ridiculous that at the moment I'm conscientiously recycling, re-using, avoiding waste and generally trying to live a somewhat ethical life yet a large chunk of my net worth is invested in guns, slaves and fracking for all I know...

2
 Jenny C 26 Feb 2019
In reply to MeMeMe:

I know our work pension scheme offers you a choice of how you want it invested and includes an ethical option, not that it gives much info on what counts as ethical.

 Ridge 26 Feb 2019
In reply to MeMeMe:

TBH guns, slaves and fracking probably gives quite a good return on the investment...

1
OP MeMeMe 26 Feb 2019
In reply to Ridge:

> TBH guns, slaves and fracking probably gives quite a good return on the investment...

Not to mention being a great night out but the guilt is getting to me so I thought I'd look at other options.

I did consult with a financial advisor but I can never quite believe that their priority is financial interests of their client rather than the financial interests of the financial advisor...

 Flinticus 26 Feb 2019
In reply to MeMeMe:

Many ethical funds are not what most people would consider ethical. You need to get a breakdown of where the fund invests: you'd be surprised at what makes it into such a portfolio: banks, transportation companies etc. 

For example, the Jupiter Ecology fund holds 3.1% in Azbil, a company involved in (from their website)

Development, design, manufacture, sales, rental, installation, repair, maintenance, import/export, testing and inspection of instruments, equipment and systems in the following fields

Measurement and control instruments, equipment and systems

Electrical, communication and precision instruments, equipment and systems

Air conditioning control instruments, equipment and systems

Disaster prevention and security equipment and systems

Optical instruments, equipment and systems

Electrical/electronic equipment for medical applications and medical appliances

Waste treatment equipment and systems (water, oil, atmosphere, etc.)

Assisted/nursing care equipment and systems for elderly and/or persons with disabilities

Gas meters and gas-related equipment for gas supply

Water meters, hot water meters and related equipment for water and hot water supply

Manufacture and sales of plastic, diecast and metal parts for equipment and systems listed above

Purchase and sales of metals, and manufacture, processing and sales of foundry pieces

Construction, security and comprehensive management of buildings and facilities, operation of facilties, and consultation and information service for their operation

Design and management of buildings

Consultation for compliance with environmental regulations and environmental management

Supply of electricity, heat, etc.

Development and sales of computer software, and information services

Home service and designated home nursing care service and support business under Nursing Care Insurance Law

Medical and assisted/nursing caregiver education and training

Sales of life insurance and agency business of non-life insurance

Labor dispatch business

 Trangia 26 Feb 2019
In reply to MeMeMe:

I would be interested to see performance comparison charts between unrestricted investment and ethical investment, but my gut feeling is that ethical don't perform particularly well in comparison.

When you are old, struggling to make ends meet and seeing your income gradually eroding it takes a lot of moral courage to be "ethical". It can also be a moot point as to what is, or isn't truly "ethical". It can be highly subjective, and not everything is as clear cut as it might appear. 

OP MeMeMe 26 Feb 2019
In reply to Trangia:

> I would be interested to see performance comparison charts between unrestricted investment and ethical investment, but my gut feeling is that ethical don't perform particularly well in comparison.

I suspect it more depends on the fund itself rather than the ethics of the investment but it would be good to see some charts!

> When you are old, struggling to make ends meet and seeing your income gradually eroding it takes a lot of moral courage to be "ethical". It can also be a moot point as to what is, or isn't truly "ethical". It can be highly subjective, and not everything is as clear cut as it might appear. 

Yup, it's never so simple is it. I think it's impossible to invest completely 'ethically' particularly as ethics are so subjective but I think it should be fairly easy to invest more ethically than I am currently.

Also I'm not that old so I've got time for investments to grow without worrying unduly, not everyone is in that situation.

I'd still like personally recommendations if anyone has them. Surely someone has some ethical investments! How are they doing?

1
 Ridge 26 Feb 2019
In reply to Flinticus:

Without going through the whole list, with the possible exception of metal foundries and aircon, what's so unethical about that particular company?

 EuanM 26 Feb 2019
In reply to MeMeMe:

Ethical investing is so subjective that it is difficult to capture all opinions/views in one financial product/fund. 

With regards to performance the spectrum is massive. Less focus on extreme ethics and more of sustainability and progressive policies within corporates doesn't necessarily have to mean lower returns. It should, if executed correctly, enhance performance over time. 

On a very basic level the chart at the bottom of this site give some indication - https://www.msci.com/esg-ratings#p_56_INSTANCE_ip8p1R7vkZbh

 Snyggapa 26 Feb 2019
In reply to Ridge:

a very valid point. Are we looking for "ethical investments" as in being restricted to investing in things that improving humanity i.e. 3rd world farming, vaccination, green energy, hair shirts and the like - or are we just trying to avoid "unethical investments" such as child labour, cigarette manufacturers, gambling and other very subjective categories.

Seems to me to have a huge variance in the two approaches, and both have an awful lot of grey in the middle.

 RX-78 26 Feb 2019
In reply to Ridge:

I would guess the example is given as to how vast and wide ranging even one company is so to monitor or select companies for ethical reasons you may have to still to smaller ones which can be assessed.

Removed User 26 Feb 2019
In reply to MeMeMe:

Rather than sift through every fund you have your money in, look for some ethical funds to invest in. Maybe four to spread your risks. If you're already in a scheme you may be able to see what funds are available in that scheme. If not you might want to talk to an independent financial advisor.

 Phil1919 26 Feb 2019
In reply to Trangia:

If you are young or younger you may not have a world fit or able to draw your pension if you don't start looking for ethical investments, ways of living. I'd rather be a bit poorer and live by a windfarm, than be a bit richer and live by an oil refinery. Equally I'd rather be poorer and 'have' to cycle on quiet lanes than have the ability to own a fast car and drive on a motorway. We will shortly begin to find out about what really being 'rich' means.

A good post. Questioning your pension fund will put another tiny bit of pressure on the need for change even if you stick as you are.  

 Phil1919 26 Feb 2019
In reply to Flinticus:

Ethical consumer rate some of the ethical funds as to exactly how ethical they feel they are measured against a number of criteria, and regularly report back on their performance.

 Jamie Wakeham 26 Feb 2019
In reply to Trangia:

> I would be interested to see performance comparison charts between unrestricted investment and ethical investment, but my gut feeling is that ethical don't perform particularly well in comparison.

They're not pension funds, so not exactly the comparison you're looking for, but the ethical investments I have made over the last few years (local hydropower, nationally diverse solar PV, and companies supplying solar power to Rwandan and Congolese villages) are all making exactly what they promised, which is around 5-6%.  All a damn sight better than any ISAs available.  Meanwhile, when you factor in a slowly increasing default rate, my rather less ethical P2P is currently coming out at about 7-8%.

Mind you, my crypto made about 450%, but I regard that as a bloody lucky gamble, not an investment!

Post edited at 12:58
 stevieb 26 Feb 2019
In reply to Trangia:

https://www.edie.net/news/10/Report--Clean-energy-stocks-no-longer-outpacin...

https://www.forbes.com/sites/mikescott/2018/02/26/clean-energy-pioneers-ear...

Green energy investment outpaced fossil fuel investment for 2 years+. But over the past 18 months it is lagging though this is significantly due to a fall in Chinese stock prices.

Any comparison will be heavily influenced by which stock markets are buoyant, the current oil price, current green fuel subsidies etc., so it's hard to make a strong case either way on such a short period but ethical investment doesn't seem to be obviously worse in this specific case.

 Gareth 26 Feb 2019
In reply to MeMeMe:

No data to hand, but my pension is split 50:50 between ethical and a standard fund with a large pension provider, ethical one has outperformed the standard pretty much every year for the last 15+, which is a reminder I need to switch to 100% in the etichal one...

Whether that is true across all ethical ones I can't say - any fund should be able to provide you with a track history I would have thought?

 Flinticus 26 Feb 2019
In reply to Ridge:

It depends on what you are looking for in 'ethical': merely avoiding the real bad shit versus investing in renewals, plastic alternatives, organic farming etc., stuff that would probably be restricted to AIM investments or VCTs

 Toerag 26 Feb 2019
In reply to MeMeMe:

I don't know how 'ethical' this is, but it's getting a fair bit of attention in the press:-

https://www.gfsc.gg/industry-sectors/investment/guernsey-green-fund

 Philip 26 Feb 2019
In reply to MeMeMe:

My current fund, which has had +25% and then +37% dropped, -7%, this year. I looked at the holdings - tobacco and oil.

Given how much a lazy vegan will pay for a box of food (see those adverts on Facebook) sold as a Recipe Kit - that's the market I want to invest in. Organic, ethical, and profitable.


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