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Healthy Investment relaunches Ethical funds with new investment criteria

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Healthy Investment, a mutually owned provider of savings and investments, has overhauled the criteria by which its ethical funds make investment decisions. 

The changes apply to its flagship Ethical With-Profits Fund and its Ethical Child Trust Fund, aligning them with members’ environmental and social values.

The ethical investments pioneer made the move following consultation with members, carried out during 2020. As a result it has both extended the range of business activities it excludes from its portfolios and set out explicitly the types of socially positive investment it will actively seek out.

This move also follows Healthy Investment’s recent acceptance as a signatory to the UN-backed Principles of Responsible Investment. It was only the second UK Friendly Society to join this initiative, which is widely recognised as the industry gold standard.

The revised criteria mean members who are invested in the Ethical With-Profits Fund have access to the cutting edge of modern ESG (environmental, social and governance) investing while retaining the benefits of a product that offers capital guarantees and “smooths” investment returns by holding back a proportion of the returns achieved in years of strong performance to help reduce the volatility that might otherwise be experienced in years of falling or weaker markets.

Healthy Investment was founded in 1835 and has its roots in the temperance movement that developed during the Industrial Revolution. Its investment funds have, for many years, avoided investing in companies directly involved in the alcohol, tobacco, pornography, gambling or arms trades.

Following its consultation with members in 2020, a number of additional screening criteria have been added to the list of sectors to avoid. These include a range of environmental exclusions, such as highly carbon-intensive industries, fossil fuel extraction or production, harmful chemical industries, companies involved in the agricultural use of genetically modified organisms and businesses whose activities contribute significantly to deforestation.

Other new exclusions include companies that manufacture or sell fur products, that manufacture products or ingredients that have been tested on animals, or that have significant exposure to factory farming. Companies with unethical business or employment practices are also now systematically excluded.

In addition to boosting its screening criteria, Healthy Investment’s new ethical mandate means it will actively seek out opportunities to invest in companies and activities that provide a social or environmental benefit – known as “impact investing”. As well as investing in renewable energy, this also means backing companies that have strong environmental policies and processes, those with a demonstrable commitment to strong labour practices and employee welfare, and businesses that uphold the highest international standards of human rights and business ethics while operating in countries where these might not be the norm.

Healthy Investment’s fund manager will also actively vote at the AGMs of companies in which Healthy Investment has shareholdings, taking into account a range of governance and remuneration issues.

Peter Green, chief executive of Healthy Investment, says: “We are enormously proud to have been at the forefront of ethical investment since long before it received mainstream attention. However, the world doesn’t stand still and it is important that we remain true not only to our founders’ values but also those of our current membership.

“Last year we surveyed our members and discovered they wanted us to be stricter in terms of the range of sectors and activities we excluded from our portfolios and, in tandem, to take a more positive approach to seeking out investments that make a difference. They don’t just want to invest with clear consciences but actually to put their money to work making the world a better place.”

A new fund manager, Aberdeen Standard Investments (Abrdn), has been appointed to implement Healthy Investment’s new ethical mandate.

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