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How to Make Ethical Investments

how to make ethical investments

There are many everyday ethical decisions that we now consistently make, such as buying Fairtrade tea, choosing a green electricity supplier or shunning Starbucks in favour of local independent coffee shops.

What about ethical investments? Managing money is another opportunity to make positive ethical choices, but as yet isn’t as mainstream as it could or should be.

The team at Ethical Consumer has just released their first guide to Innovative Finance ISAs to show consumers how to make ethical investments so that they can potentially use some of their savings to more effectively help tackle issues as diverse as climate change and the housing crisis.

Tim Hunt from Ethical Consumer explains what an Innovative Finance ISA is, and takes a look at the most ethical ways to invest in one.

Innovative Finance ISAs (IF ISAs) are a relatively new savings product introduced in 2016 to offer investors an alternative to the traditional Cash and Stocks and Shares ISAs.

They are great news for ethical consumers who are looking to use their savings for the benefit of society and the environment by offering the potential to invest in fully transparent ethical projects.

An IF ISA is essentially a way to invest in projects and businesses via a crowdfunding platform such as Abundance or Lendahand, potentially giving total control on where your money is invested. The good news is you can invest in some of the projects for as little as £5, making it an easy way for new ethical investors to test the water.

Changing money markets

IF ISA’s currently account for less than 1% of the UK ISA market but they are rapidly growing in popularity. Last year  £290 million was invested in them, eight times more than in 2016/17.

For too long consumers have allowed banks and financial institutions to take decisions for them, sometimes investing in damaging products and businesses, like fracking or palm oil plantations.

Now consumers can cut out the middleman at the bank and create portfolios of ethical projects to invest in using IF ISAs.

There are currently more than 65 platforms in the UK offering IF ISAs, with a wide range of projects to invest in. Aware that consumers are now more likely than ever to look for an ethical option, some of these platforms are marketing themselves as offering ethical investment opportunities.

We’ve done the research and awarded four platforms ‘Best Buy’ status these are Abundance, Energise Africa, Ethex and Triodos Bank.

All four platforms offer investments in a range of environmentally and socially minded projects both in the UK and abroad.

Abundance has been a pioneer of raising green finance ever since it launched in 2012. Historically, Abundance has allowed customers to invest even very small amounts, from £5, in different projects. It only funds what it calls ‘socially useful’ projects. These have largely been green energy in the form of wind turbines and solar farms, but have also included a project recycling used cooking oil into bio-diesel and, most recently, affordable housing.

Energise Africa is designed to provide working capital to projects that install and sell solar home systems in sub-Saharan Africa. The aim is to provide more than 111,000 rural families access to renewable energy over the next three years. Home systems tend to provide simple electric lighting and phone charging facilities.

Ethex recently funded the Solar for Schools Community Benefit Society (CBS) that was set-up in 2016 to enable schools in England and Wales to derive some financial and environmental benefit from solar panels.

Triodos is the first UK bank to launch its own crowdfunding platform. Since its launch the Triodos crowdfunding platform has raised £20 million for eight pioneering organisations delivering positive change. An example is the £1.8 million bond that was successfully raised for Mendip Renewables in 2018, which owns and operates a 5MW community solar scheme and uses its retained profits to support charities in Somerset.

Ethically Invest sensibly

In the Ethical Consumer guide to ethical investments, it reminds potential investors that whilst only Financial Conduct Authority (FCA)-regulated platforms can offer an Innovative Finance ISA, they come with no other protection. IF ISAs don’t qualify for the savings element of the Financial Services Compensation Scheme (FSCS) that protects up to £85,000 should a firm go bust. Neither do they get the FSCS investing element that covers up to £50,000 in case your investing platform goes bust and hasn’t done what it is meant to with your money.

It is also more difficult to access your money with an IF ISA. Most of the assets (or loans) will be fixed term, making instant access impossible. You should, therefore, take into account the length of time the asset is held for when making a decision about what projects to invest in.

That said you can limit your risk by investing in these Best Buy options that work closely with projects to ensure that they succeed, and by investing small amounts of money into a number of projects spreading your risks.

If you can afford to take a risk with a small amount of your hard earned cash, then these platforms provide consumers the opportunity to make ethical investments directly into projects that have tangible positive impacts.

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AD| Ditch the Single-Use Plastic with Phox

Paid-for content in association with Phox

Did you know that World Water Day was on Friday? This year the theme was leaving no-one behind – addressing the reasons why billions of people across the globe still don’t have access to safe water.

Here in the UK, we are incredibly lucky to have constant access to safe, clean water 24 hours of the day, 365 days a year. However, whilst our water is clean and safe, not everyone seems to like the taste of our tap water. Each year over 3,100 million litres of bottled water are sold in the UK. A staggering amount for a country with clean and safe water literally on tap.

How do you feel about tap water? I had always been happy to drink tap water – after living most of my years in Scotland I could not for the life of me work out why anyone would drink either bottled water or filtered water. I believed that anyone that was sucked in by either option was, let’s just say, more than a little misguided.

That was until my late twenties when we moved to the south-east of England. What a shock to the system.

After a lifetime of soft water, the hard water of Hampshire felt like an assault on our taste buds. I could just about tolerate a glass of water, but when it came to tea it was a dealbreaker. Not only was the taste of tea fairly nasty, but visually it wasn’t right either. I noticed my tea always had a horrible greasy looking film on top, which is never particularly appetising. Worst of all, sometimes big furry bits of limescale would come loose from our kettle and end up floating in my mug.

After about a month I ripped up my previously held beliefs on water filters and bottled water. Not wanting to go down the bottled water route for environmental reasons, I found myself in Robert Dyas handing over money for a water filter, desperate for a decent cup of tea, but not wanting it to come at the environment’s expense.

I was so excited to get home and try it out, but that feeling lasted all of five seconds when I realised that the water filter I had assumed was the ecologically superior option to bottled water actually had a plastic filter cartridge that required replacing every 30 days with another plastic filter cartridge in order to keep on enjoying filtered water. Suddenly this one innocuous jug that we filled with tap water became this consumer of single-use plastic.

According to Phox – an ethical water filter company based in Glasgow, who are launching on Kickstarter today – over 100 million filter cartridges go to landfill each year. That’s a lot of plastic.

If only Phox had been around in our Hampshire days. Phox, as a company, aim to help eradicate the single-use plastic problem associated with both bottled water and filtered water. Not only are they launching their stylish V2 water filter that is made in Scotland from recycled plastic and glass, but it’s also the first ever water filter to completely eradicate disposable plastic cartridges.

phox v2 water filter

Instead, Phox’s V2 filter has a refillable cartridge, meaning you can say goodbye to single-use plastic waste. The only thing you have to replace is the filter’s inner material. The used inner materials can be disposed of with general household waste, meaning your water filter generates only a tiny amount of waste compared to your average water filter.

Different filters can be used for different purposes. The “Clean Pack” filters water to around a pH neutral level (ideal for coffee purists), and reduces heavy minerals, odours, and bad tastes. Meanwhile, the “Electrolyte Pack” creates alkaline water which aids hydration and sports recovery, and can be beneficial to acid reflux sufferers and those on an alkaline diet.

Phox has cleverly thought of everything – right through to the postage of the filter’s inner material. Instead of swathes of plastic wrapping, as they are only sending the bare minimum – the inner material – this is delivered in a slim box made of recycled card, that conveniently fits through your letterbox. It’s easy on the packaging, which is great for the environment, but it also means no more missed deliveries either!

The V2 water filter launches today on Kickstarter, and to celebrate its launch, Phox is doing a special early bird offer where you can get 60% off the normal RRP off the stylish V2. As well as the water jug itself, you get a 12 month supply of filters, and a water bottle for hydration on the go, all for £45 instead of the normal price of £115. This offer lasts for 48 hours only, from today, Monday 25th March until Wednesday 27th March, so do get in quick if you are considering purchasing one of their water filters.

You can visit Phox via their website and social channels – Instagram, Facebook, Twitter, and YouTube, and remember to check out their Kickstarter!