Back in January, we conducted a survey – offering readers the chance to win a tablet or a charity donation in return for telling us what they thought about us. Vanessa Kelley, a financial adviser at Barchester Green, was the lucky winner, and donated her £269 to the Animal Protection Agency (APA).
A small charity, the APA’s main concern is the exotic pet trade – focusing on lobbying politicians to impose greater regulation on the industry, so that only suitable animals are allowed to be kept as pets.
Vanessa Kelley, a stalwart of the ethical financial advice industry for over two decades, spoke to Alex Blackburne about how best to communicate ethics to potential investors.
How did you get involved in ethical financial advice as opposed to financial advice more generally?
Twenty-something years ago, I worked for a major insurance company. I offered my services to members of the anti-animal testing group, the British Union for the Abolition of Vivisection (BUAV), offering to donate half my commission back to BUAV for clients that supported them.
When I had enquiries from clients who wanted to work with me, I noticed that all of the funds I could offer invested in pharmaceuticals that tested on animals, and indeed other industries that exploited animals. So I realised that I could not help those particular people. That led me into becoming interested in ethical investment.
Why should people consider investing ethically?
I think that most people have got some concerns about where their money is invested. But unless they invest ethically or explore those areas, then they may well be investing in areas they don’t believe in.
I also think the prospects of ethical investment are particularly good, particularly areas such as environmental improvement and sustainability. And since we’ve had the issues with the banking sector and large pay awards to people who haven’t done particularly well more people have become concerned about corporate governance and extending this to other ethical and environmental issues.
Ethical investment is a widening market. I’ve been doing it for over 20 years, so I’ve seen changes in the industry and in people’s criteria, as well as a widening of people who want to take their ethics into account.
What changes have you seen since you started giving ethical financial advice?
When I first started, ethical investments were the predominance of religious investors. This was a major factor, and the criteria were quite limited: gambling, pornography, alcohol and so on. But things like the environment and the treatment of animals became areas of concern as ethics evolved.
It’s just become a wider circuit, as it has in the world really. We’re all much more aware of the environment now. I look back 20 or so years ago, and we looked at funds like Jupiter’s Ecology Fund, which was at the fore of environmental issues. It was thought of as a bit of a ‘hippie’ investment by the conventional finance sector, but actually when you look at the sort of companies it invested in these are now held some conventional funds.
Do you think there’s a compromise to be made between getting a strong financial return on your investment and doing the right thing ethically?
I think it depends on the fund. If you’ve got good experienced fund management and knowledgeable in house research team, the performance should be competitive anyway.
I’ve found that the stricter ethical funds, with fund managers that are much more experienced, have actually performed better than those funds that perhaps just pay it lip service because they feel they should have an ethical fund. Those funds haven’t in general done particularly well.
Do you think the sextet of sin – the six stocks historically avoided by ethical investors (alcohol, gambling, tobacco, armaments, pornography and nuclear) – is still relevant today?
I do, but I think that there are certain things that need to be included that aren’t.
I’ve got my particular concerns over one industry that I think is pretty much swept under the carpet, and most people are not knowledgeable about the effects, and that’s the meat and dairy industry. There’s lots of talk saying that it’s the number one industry causing environmental damage.
And also, the fact that we’re growing so much food to feed animals that pound by pound doesn’t work or justify itself. I believe this is an issue that needs to be considered by fund managers and anyone concerned about the environment. I think it needs to be brought to the fore a lot more.
There is a real danger to food sustainability and investment in alternative [non-animal sourced] foods with a lower carbon footprint are an area that’s needs to be seriously researched and supported.
What is stopping ethical investment from truly taking off in the UK?
If I look at it 20 years ago compared to what it is now, then I think it’s taken off well. But there is still a lack of knowledge by many investors. Unless you’ve got a specialised adviser or companies really pushing this, many people just don’t know where their money is invested.
I meet with people that are conventional investors, and they’re quite surprised when I talk about areas that their funds might invest in. The general answer from these people is, “I wouldn’t want to invest in those areas.” But they’re not told of the issues so they aren’t aware.
When people either pick a fund themselves or they see an adviser, too few advisers actually say, “You might be invested in these areas, is that a concern for you?” It’s just about getting the information out there. There’s a lack of knowledge and communication.
What needs to be done to make ethical investment mainstream?
I think that really, the information has to be out there and there has to be a lot more honesty. Look at animal testing, for example, most people have no idea of the products and ingredients that are tested on animals, or the actual tests that are carried out, many people do not even realise this testing is going on.
I think that for products that test animals, it should be stated that they test. Maybe, it will never happen, but I wonder what would happen if funds had to state “We might invest in arms companies” and so on.
There has to be a lot more transparency of where companies and funds are investing.
What’s the biggest consequence for people who don’t invest ethically?
They’re not going with their own values. Talking about the future of planet is probably a little bit too much, but we all need to be conscious that we need to do things. And part of what we need to do is look at where we invest and spend our money.
A lot of people when spending money might opt for fair trade goods. We need to extend that to money.
I come across a lot of people with investments who are shocked about where their money is invested. For example, there aren’t many people who would tolerate a company that uses slave labour however without the information they may well be investing in that very area.
Previous interviewees include:
- Jeremy Newbegin, of the Ethical Partnership (New Forest and Guernsey)
- Lee Smythe, of Smythe & Walter Chartered Financial Planning (London and Kent)
- Julian Parrott, of Ethical Futures (Edinburgh)
- Ash Rawal, of Lighthouse Impact Ltd (Derby, Derbyshire and the East Midlands)
- John Ditchfield, of Barchester Green
- Martin Stewart, of Stewart Investment Planning (Bristol)
- Ian Green, of Green Financial Advice (London)
- Christian Thal-Jantzen, of Bromige (Sussex)
- Richard Hunter, of Equity Invest (London)
- Helen Tandy, of Gaeia (Manchester)
- Lisa Hardman, of Investing Ethically (Norfolk)
- Scott Murray, of Virtuo Wealth (Edinburgh)
- Graham Walton, of PHFS Wealth Management (Sheffield)