***Ethical funds — which attempt to give capitalism a human face by refusing to invest in armaments industries or polluting companies — continue to attract the cash of small investors. But it is more than Just conscience money, reports Gemini News Service, because fund mangers say that morality pays dividends.***

AMONG those rubbing, their hands over South

Africa's first majority role elec^on are the mangers of the growing number of ethical funds."

These funds attract customers by buying shares only in companies Judged to be environmentally or politically sound — and until this year lhat Included firms Investing in apartheid South Africa. Now Pretoria has lost Its pariah status, enabling, those with a conscience as well as money to invest in the country's lucrative mining and industrial concerns.

Though defining what constitutes ethnical Investment behaviour is still open lo debate. the sector Is attracting serious money in the United States, where Is started in the 1960s. and on a smaller scale elsewhere.

In Britain for example, small investors have ploughed more than £550 million into about 30 different units, trusts and pension schemes, up from £365 million in 1993. Ethnical funds Invest In shares as Tn any other unit or Investment trust pension or insurance fund, except for the way the shares are selected.

For example, a "green fund" manager would not buy stocks

of a company making toxic chemicals or practising factory farming of animals for a fast

• food chain. Peace activists' would demand that the trust or pension funds they invest in stays clear of arms and munition manufacturers.

Decisions can be finely balanced. South Africa, for example. though back in the fold of places where people with principles can Invest, is not totally In the clear. Companies there are still being monitored for wage differentials for employees of different races and training programmes for black employees.

Peter Webster., executive secretary of Ethical Investment Research Services (EIRIS), claims that interest in the ethnical sector Is growing rapidly. EIRIS Is often used by fund managers to scan (he credentials of companies they want to Invest in.

Webster says that more than 90 per cent exclude anything to do with armaments.The tobacco Industry is the second most shunned sector. Environment is also one of the prime concerns on both positive and negative lists, which indicate the companies to invest in and

those to be shunned.

On the negative lists are usually companies using tropical timber, dealing in pesticides and ozonc-depletlng substances, nuclear power and those Involved in animal test-

The oldest ethical fund in Britain. Stewardship, run by Friends Provident, has existed for more than a decade, but the boom in ethical funds, towards the end of the 1980s has tailed off a little.

ing. says Webster, adding that criteria are always chosen by the client. On the positive list are companies that publish their environmental statements.

"Funds would want to invest in companies that either produce environment-friendly goods oj conform to environment regulations, and avoid groups that degrade the environment.” Webster says. Other major concerns of "ethical" investors Include gambling outfits and'alcohol, he adds.

Nonetheless, ethnical funds are matching and in some cases out-performing the general funds, especially over a longer time-frame. According to Mlcropal. an independent research group that monitors about 20,000 funds around the world, ethical units trusts in Britain registered an average growth of 5.48 per cent In the last financial year and an Impressive Jump of almost 49 per cent over the last five years.

For the corresponding period, general units trusts In

the equity growth market achieved 6.2 per cent over one year and jiist over 35 per cent over five years. For the equity general market, figures were 4.6 per cent and 40.9 per cent respectively. Funds investing internationally tended to fare better.

A’spokesman for Stewardship. which is also the largest ethnical fund with about £167 million, sees this as a clear . indicator that "one does to have to sacrifice ones finances for ethics."

Paul Barns, press officer of Mlcropal. says ethical considerations undoubtedly limit options. "It is really a question of when the political will of the government will change to support things like renewable energy so that the investor can benefit by putting his or her money thpre."

Others disagree, pointing to various other investment opportunities. Peter Silvester, investment director of Friends Provident, recently said his group had identified "more than 430 quoted companies with a market value of £140 billion which conform to our criteria."

Still others go beyond the

division between ethical/green and regular funds. They claim that environmentally-sensLtive companies have already ' crossed the Rubicon and are actively sought after.

"Nowadays, the financial Consequences. ' for firms, which ignore environmental legislation are huge " NM Consciences Brian Wilkinson said recently It means com panies which have sound ethnical and environmental policies are likely to be better

managed and have better growth prospects.

Purists, however, disagree with the whole approach. Says Derek Wall, author of the book. Getting There: Steps Towards a Green Society: "Ethical investment can be seen as a way of window-dressing the whole consumer-capitalist destruction in a typically reformist way; combining ethics and the market rather than challenging the system fundamentally "

This is a contentious issue.

with many believing in a gradual. transitional switchover to caring capitalism" by metho^|. such as ethical funds and buying shares In a company In order to have Ihe right to make speeches and lobby at annual meetings.

People like Webster believe that with ethical funds giving the general ones a run for their money, people might as well listen lo their conscience and put their money where their morals are— Gemini News