Jeff Salway: Unethical investments a mystery THE scale of the task facing ­investors and pension savers who want to know where their money goes has become ­clearer after fresh revelations over charity holdings in ­"unethical" industries. Comic Relief has pledged to review its investment policies after it was revealed that the charity has ploughed millions of pounds into tobacco, alcohol and arms companies. The spotlight has been turned on charity investments in the wake of a Panorama documentary last week which focused on Comic Relief's holdings in firms such as British American Tobacco and BAE Systems. It came in for heavy criticism after it emerged that it had £630,000 of shares in the latter, a weapons manufacturer, seemingly undermining a pledge in its mission statement to help "people affected by conflict." The charity said it had a duty to invest money in a way that would produce the greatest returns. But the controversy highlights the challenge that charity donors, pension fund members and private investors face in knowing where their money is going. Through investments in managed funds Comic Relief held money in tobacco, alcohol and weapons firms between 2007 and 2009. The documentary claimed that because Comic Relief has since changed the ways its accounts are presented its holdings are no longer transparent. Julian Parrott, partner at Edinburgh-based Ethical Futures, a specialist financial adviser, said: "Investment managers publish some detail public about holdings in publicly available fact sheets and most industry advisers can obtain more in-depth information in confidence - so if the desire is there to see how money is invested it can be easily achieved." But more than two-thirds of Scottish investors and pension savers have holdings in companies and industries that many consider unethical, according to a recent report by Triodos Bank. It found that almost three-quarters of Scots want to avoid investing in companies with activities linked to human rights abuses, while six in ten objected to having money in firms linked to pornography and almost half said they would prefer to steer clear of arms manufacturers. Yet just 22 per cent of Scots with holdings in pension and investment funds have sought to prevent their money from being held in assets that conflict with their principles, said Triodos. It claimed that many people would be "shocked" if they knew exactly how their money was invested. There are now dozens of ethical funds available to those who don't want exposure to certain companies or industries. More than £12 billion is invested in UK green and ethical funds, responsible investment specialist Eiris revealed in October. The figure is a record high and compares with just £4bn in 2001. However, there remains a perception that investing ethically amounts to sacrificing growth for principles. In its response to the documentary Comic Relief implied that ethical funds were unable to deliver the investment growth it sought. But that isn't the case, ­according to Parrott. "Extensive academic research by has demonstrated little difference between screened and unscreened investing over the longer term," he said. In fact in recent years it's been the very exclusion of tobacco as well as mining and oil that has contributed to the above average returns from ethical funds. Of the 80 ethical funds available for ordinary investors, ten have grown by more than half in the past year, Eiris found. Charities such as Comic Relief should lead the way by investing responsibly, Parrott said. "You don't have to be that perceptive to see that a charity that seeks to help the children of a family affected by alcohol misuse being funded by the profits from irresponsible alcohol marketing is a contradiction and a vicious circle," he said. "In this context, rather than it being a problem for Comic Relief to select an ethical investment strategy, it should be part of its raison d"être."