Screening for ethical concerns

Screening for ethical concerns
  • Investment Insight
  • 2 minute read

By looking at what an entity produces, it’s possible to exclude sectors and
practices that don’t align with certain values. We asked investors which of these commonly screened-for sectors and practices they objected to on ethical grounds, and which they would or wouldn’t invest in.

 

Investors uncomfortable
with this on ethical
grounds

Investors uncomfortable, but would
invest for financial
reasons

Animal testing for
cosmetic purposes

75%

25%

Weapons/arms

72%

28%

Tobacco

66%

29%

Gambling

65%

29%

Nuclear power

61%

29%

Adult entertainment

58%

27%

Oil and gas production

58%

31%

Oil and gas equipment
and services

56%

31%

Gas utilities

53%

31%

Alcohol

52%

27%

Of least ethical concern is alcohol, though there’s an age gap here – older investors (55+) are much more comfortable investing in alcohol than young investors (50% have no ethical issue and would invest, compared to 30% of 18-24s and 31% of 25-34s), but much less comfortable investing in tobacco; this could be a reflection of living through the cultural shift away from public smoking.

With concerns around climate change reaching record levels in the public consciousness in recent years1, it’s very likely that the next generation of investors will have a close eye on investments which have a damaging environmental impact.

What tops the list, both in terms of ethical discomfort and an unwillingness to invest, is animal testing for cosmetic purposes, and weapons/arms. These are the themes that warrant caution when being discussed with clients, and are likely to be the key areas that investors may want screened out of their portfolio.

 

1 Iposos MORI: Concern about climate change reaches record levels with half now
‘very concerned’, 12 August 2019.

Personal financial planning

Explore the full results of the Responsible investing survey 2021

Source: Close Brothers Asset Management, Responsible investing survey 2021 - which included over 2,000 clients at Close Brothers Asset Management.

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