When you put money in a savings account, the bank or building society can lend your deposits to firms to support and grow their businesses. If you invest in shares, fixed-interest or investment funds, you are even more directly investing in businesses. Ethical saving and investing lets you be selective about which firms you help.
What counts as ethical?
In general, there is no single definition of ‘ethical’.
Each person might have their own view of the types of industry they feel unhappy to support or those they would like to actively support.
For example, you might be concerned to avoid firms that employ child labour, while your neighbour’s priority might be green technologies to fight climate change.
Similarly, different ethical products take a different stance on the investments they reject (negative selection) and those they support (positive selection).
However, if you’re looking for Sharia-compliant savings and investments, Islamic law sets out the principles to be followed.
Including, for example:
- Avoiding investments related to pork, gambling and pornography, or
- The earning of interest (which is considered to be exploitation – similar to the usury laws that used to apply under Christian law).
Choosing ethical savings or investments
To save or invest ethically, you need to research the banks, companies or investment funds you’re thinking about to see what ethical principles (if any) they put in place and whether these are a good match to your own principles.
This article is provided by the Money Advice Service.