Ben Holgate talks to Lisa Ashford, of Ethex, about the rapid growth in ethical investing

At a time when ethical investing is often framed as avoiding carbon-based companies such as miners, Oxford-based Ethex is collecting kudos for its wider approach to investing with a conscience.

Last month, Ethex won the City of London’s Sustainable Finance Award in the city’s annual Sustainable City Awards. What made the win even more significant was that Ethex, a not-for-profit organisation that facilitates “positive investment”, was among a regional minority as only 15 per cent of entries for the UK-wide awards came from entities based outside greater London.

Lisa Ashford, Ethex’s chief executive offer, said the award “brings us credibility and it also shows that we are beginning to build a movement around making money do good”.

The award recognises innovation in investment and finance that supports sustainable economic development, enhances the quality of life and safeguards the environment.

Ethex, which is based in Cowley Road, has so far raised about £13.5m to support 28 businesses and organisations since it launched in 2013. Miss Ashford said the “vast majority” of that money had come from capital raisings – whereby entities attract money from investors by issuing new shares – and the remainder from corporate and charity bonds.

Ethex is a hybrid organisation in the world of alternative investing. It acts as both a market maker and an exchange through its website, which connects individual investors with a modest range of equity, bonds and savings products that Ethex has screened through social and environmental filters. Investors can also buy and sell shares of some unlisted companies with the share price determined by demand and supply.

The website provides some detail on expected financial returns and financial performance, and social performance, among other things, for each investment. It also includes warnings about the potential risks of investing.

Miss Ashford, 42, who lives in South Oxfordshire, said Ethex’s target investors were “everyday people” who wanted to “take control of their finances” and put their money in “positive investments”.

She explains: “It’s positive investment because it goes beyond negative screening.”

Whereas many ethical investment vehicles exclude specific “negative” sectors like alcohol, tobacco, arms or pornography, leaving investors with “the best of the rest”, Ethex instead enables investors to choose “to support businesses which you believe are doing good things”.

Simon Mills, the City of London’s head of sustainable development and corporate policy, said Ethex had “revolutionised the model” for sustainable investment. “They have given the consumer the power to invest because knowledge is power.”

Mr Mills said Ethex had “one of the simplest websites for investment I have seen”.

He said that prior to Ethex investors interested in sustainable development had to go to “opaque bankers”, but Ethex’s website cut out the middlemen.

Mr Mills said that while the concept of ethical investment was not new – for instance, the Quakers campaigned against investing in the slave trade in the 18th century – it was perceived as “very fringe” until the last decade. “There is a view that good business is good business,” he said. “We’re going to see more of this.”

Miss Ashford said Ethex’s two key criteria when selecting investments were their social and environmental benefits. Ethex initially looks at these two factors when conducting an initial screening of potential investments to determine “whether the organisation has the right kind of ethos to be listed on Ethex”.

If the entity makes the first cut – and only about half do – the Ethex team then completes its due diligence by looking at other factors such as financial returns, corporate governance and transparency. The whole process generally takes about three to four weeks.

So far, Ethex has attracted about 1,600 unique investors for 46 different products, which range across equity investments, bonds and savings accounts. About 30 products are currently active on the website.

While many of the products are located throughout the UK or overseas, to date three have been based in Oxfordshire: the Low Carbon Hub, which conducted a £1.5m share issue to fund a network of solar panels on the roofs of schools and businesses in Oxfordshire; Westmill Solar, which operates a community-owned solar farm on the Oxfordshire-Wiltshire border; and the Ethical Property Company.

Ethical Property owns or manages a portfolio of properties across the UK that are mostly tenanted by charities, social enterprises and voluntary groups. The company was co-founded in 1998 by Jamie Hartzell, who went on to establish Ethex in 2013.

Mr Hartzell stepped back from being managing director to become executive chairman in early 2015, handing over the reins for day-to-day operations to Miss Ashford, who joined Ethex in 2013 as a consultant. Miss Ashford’s background is in energy and environmental finance and she holds a Postgraduate Diploma in Financial Strategy from the Said Business School, University of Oxford.

The Ethex chief believes ethical investing is becoming increasingly popular because of “a growing mistrust of the financial sector” as well as people wanting to take on personal responsibility for where their money is invested.

Ethex will hold its “annual gathering” in Bristol on June 8.