Ethical investing has moved on from being solely a consideration of investing in companies that do not harm the environment.  It encompasses wider issues such as helping those that are worst-off in society and this has led to “Impact Investing” which looks to generate a positive impact on the environment and society by backing companies which are actively trying to offer services or create products that will help make things better.

There are several different approaches to ethical investing such as actively avoiding investing in companies that operate in negative industries such as those that cause pollution or societal issues (this is known as negative screening).  Others will try to use their investment to try to convince companies to adopt a more sustainable approach.

It has often been suggested that investing ethically comes at the cost of lower investment returns but several pieces of research have suggested that this is not the case.  Recent research undertaken by Morningstar showed that over a 10-year period through 2019, 58.8% of sustainable funds across seven different categories outperformed their average traditional peer.