Ethical fund managers will regularly search for new companies to invest in, whilst also monitoring the activities and practises of the companies already in the fund, to ensure expected standards are maintained.
As shareholders, funds can even use their influence and voting power to steer the organisation towards ever higher ethical standards, attending AGMs and lobbying the board of directors. Where the fund holds a significant shareholding (e.g. 10% or more) they may get an audience with the board of directors where they can highlight issues and help influence the strategic direction of the organisation. Ethical fund providers sometimes join forces to wield more influence over the board, if their own shareholding is too small.
If a company consistently allows its standards, and therefore its ESG rating, to slip, fund managers are able to withdraw investors’ money and remove the company from the fund.
All ethical fund providers have built a level of independent verification into their processes, usually carried out by an autonomous and impartial organisation, to ensure that no bias creeps into the fund’s screening and monitoring process.
connectpx also has its own code of practice, set out in our ethical investing policy. Our investment team will regularly monitor the ethical funds using specialist ESG company assessments conducted by a third party, to ensure that their standards of practice are not falling below what is expected.
We have a pool of up to 25 funds with which to build your ethical plan. The combination of funds we use depends on which investment style you choose and how we decide to balance your plan. The pool of funds will also change from time to time.
We’re using active (rather than passive) ethical funds in our plans, so-called because they are ‘actively’ managed to ensure that the investments within maintain the high ethical standards required. We think this is a robust way to manage our ethical investment plans, since actively managed ethical funds can take a far more qualitative approach: using a wider set of criteria and applying a common-sense approach to selecting sustainable investments. Passive funds on the other hand use a fixed ESG score to screen companies, offering little flexibility. Passively-managed ethical funds are also unable to exert shareholder pressure on individual companies in order to drive for positive change.
Current list of funds:
Please note: the funds and fund providers we use will be reviewed and may change from time to time, which may not immediately be reflected here.
Our ethical Plans are built using a combination of mutual funds and ETFs (exchange-traded funds). The funds contain multiple investments, selected by the fund providers according to their strict ethical screening processes.
The funds will typically include:
Shares (owning a piece of a company): excluding companies that profit from ‘sin sectors’ such as gambling, tobacco, adult entertainment and weapons among others. It will only include companies that demonstrate great environmental, social and governance standards, according to the fund providers’ and connectpx’s strict criteria and ethical investing policies.
Bonds (an IOU from a government or company with some interest): both corporate and government bonds may be included and will be subject to the same strict screening criteria as shares.
Thematic investments: one or two funds will focus on investing themes such as gender equality (companies that strongly champion these issues) or green energy and will mostly be used in higher risk plans.
We’ve created five Ethical Investment Plans – from Cautious to Adventurous – so you can choose a level of risk that’s right for you. Find out more about what’s in each of these plans by downloading the ethical plan factsheets, below.
Ethical Plan Factsheets
Cautious Ethical Plan [download pdf]
Tentative Ethical Plan [download pdf]
Confident Ethical Plan [download pdf]
Ambitious Ethical Plan [download pdf]