Rachael Revesz, The Independent

Millennials are pretty good at eco-awareness. More and more of us are ditching fast fashion, using our non-disposable water bottles and coffee cups, composting food waste, buying electric cars (if we can afford them), and growing houseplants. But there’s one area where I’d wager the vast majority of us are being extremely (and unknowingly) unethical – and that’s where we invest our money.

The term “investor” indeed applies to most people because even if you don’t buy and sell stocks yourself, your employer has a legal requirement to contribute some of your salary into a workplace pension, and that money is invested too.

So, we might have been supporting our local bookshops during lockdown, but we are unwittingly invested in Amazon. We are taking the train to France to lower our carbon footprint, but we’re inflating the share price of British Airways. We didn’t much like the bail-out of RBS, but we’re propping them up too. Smoking killed our granddad, but British American Tobacco is on the list. We’re not keen on these property developers that seem to smash down everything for a profit, but there are plenty of them in the portfolio. Don’t get me started on oil and gas companies, and drug price-hiking pharmaceuticals… oh, wait. Why are we all invested in these corporate horrors? Because they are mostly unavoidable – they make up a large chunk of the UK and US stock market. You’d have to physically remove them to end up with an “ethical” selection of stocks, and that’s what many ethical investment portfolios do. Over the years, this “negative screening” process has become slightly more nuanced and has shifted away from focusing on alcohol and tobacco to also consider companies’ labour practices, for example, or their carbon footprint.

But having worked in this area as long as I have, I can tell you a few things. One is that these funds are always bafflingly more expensive than the mainstream options. On Wealthify’s website, for example, I would pay 0.68p a month if I invested £1,000, and this jumps to £1.05 for the ethical option. This is not uncommon, partly because the provider has to use a mix of funds to achieve a diversified portfolio in the ethical space, and partly because ethical funds tend to cost more anyway. It’s not right, in my view – but it sadly reflects the fact that many ethical choices we make, even in the supermarket or a clothes shop, are a commercial opportunity for someone else.

Second, if you remove every stock you disagree with on some level, you will end up with nothing left. That’s why a lot of our ethical funds are watered down. For example, certain stocks are let in, as long as they derive no more than 10 per cent of their revenue from alcohol. And so on. How do you really define “ethical” when there are so many limitations in place? The answer involves a piece of string and an industry always trying to catch up. As an investor, therefore, you have to decide what you care about. I’d be happy to invest in a distillery and am proud that the Scottish economy benefits from exporting whiskey. I care more about focusing on gender and racial equality at a company, along with its carbon footprint and labour practices. But fund providers are heavily reliant on public data and data provided from the companies they invest in, and research shows companies are not very good at disclosing that information.

In other words, we have to work with what we’ve got, but push for better.

What can you do? For starters, do your due diligence – a fancy term for understanding what you’re invested in. If you have money with a company that is investing your money for you, they usually provide information on their website or you can contact them. You can also contact your pension provider, either directly or through your HR department, and ask to speak to them about their ethical fund options. Third, you could go your own way. There are now billions of pounds invested in portfolios that are built from the bottom up, focusing on issues like veganism and gender equality, rather than investing in a mainstream market. The main three rules when it comes to investing are to think long-term, only invest what you can stand to lose, and don’t put your eggs in one basket. But in 2020, if we really want to put our money where our mouth is, the fourth rule should be to invest ethically too.