Ciaran Hughes QFA
Drive positive change
Updated: Jan 31, 2021
Author note: Ciarán Hughes is a financial advisor at Ethico and an expert in ethical and sustainable investing solutions with 10 years+ experience in financial services.
B.A. Accounting and Finance (NUIM)
Qualified Financial Advisor (LIA)
Responsible Investment Advisor (PRI academy)
Professional profile LinkedIn
What companies fuel your current pension, and are they ethical by your standards?
Imagine you are buying a car. The dealership has two models of the same car that are identical in every way. Great design, sleek look, and an excellent safety record. The only difference is the fuel source. One is diesel, and one is electric. They both have the same range and performance, so there is no advantage or disadvantage either way. The one BIG difference is that the electric car is much better for the environment than the diesel car. Which one would you choose?
It is a good idea to save for your future. Pension funds provide the best vehicle to achieve this. But not all pension funds are created equally.
Your pension is the vehicle that will take you through to retirement and beyond. You can choose the elements that make up the drivers of that pension. By doing so, you can have a positive effect on the world, without sacrificing on price or performance.
What types of companies do ethical funds invest in?
There is a broad range of companies in most ethical funds. Fund managers will endeavor to diversify by sector, country, and industry so that you don't have all your eggs in one basket. Companies with strong records on the environment, work practices, social behavior, and governance will be prioritised.
Examples might include adding more renewable energy companies that produce solar, wind, and hydro electricity. To make space for the good, fossil fuel companies might be removed. Healthcare, disability supplies, and ethical pharmaceutical companies might be purchased over armaments or tobacco companies that would not receive investment. Organic or sustainable food producers would be included and GMO or junk food companies would not make the cut.
You can start to see the trend here. Some ethical funds have over 30 years of historical data to prove that they do work. The next step is to push this strategy further into the mainstream and you can help drive that change.