Money maven: How can I help save the planet?

Q: I have just been left £10,000 by my grandfather. I would like to invest the money but don’t know how. I also have strongly held environmental beliefs, so don’t want my money to be invested in companies that harm the planet. Where do I start?

A: Your letter is very timely given the COP26 conference taking place in Glasgow. Lots of people hold strong beliefs in where their money should or should not be invested, and there are a plethora of different types of ethical and environmental funds to cater to these beliefs. Before you invest you need to sit down and work out what your investment parameters are and identify your red lines. Do you want a fund that avoids certain types of companies such as tobacco, one that only invest in environmental companies, or one that invests in companies trying to change their working practices to become more environmental?

According to Laith Khalaf, head of investment analysis, at investment platform AJ Bell: “The situation is not helped by a variety of approaches to ethical investing, with some funds simply tilting away from the worst environmental, social and governance (ESG) offenders, others entirely excluding them, and some funds actually seeking out companies having a positive impact on environmental and social issues. Industries are also taking positive action to curb less palatable practices. For instance, BP is aiming to be a net zero company by 2050, and Philip Morris has committed to a smoke-free future. Some investors still won’t want these stocks, but for others, transitioning may constitute enough for inclusion in a sustainable portfolio.”