Ethical investment

He started his working life as a documentary film-maker for the BBC’s natural history studio in Bristol, transformed himself into a property developer and now he is running an Internet company specialising in financial investment.

But his career has a common theme — ethics. As a film-maker, he specialised in environmental topics and edited The Vanishing Earth, a programme looking at the causes of the famine in Ethiopia and went on to make films for the United Nations.

He fell into the property industry by accident after meeting Andrew King, who had bought a building in Bristol to rent out to charities and campaign groups.

“I moved to London and was working in my attic, making films, which was very tense with small children at home, so I started looking for premises for the film business and bought a building near my house.

“It had spare space which I rented to a refugee group and the Green Party. Then the building next door came up for sale and I got a loan to buy that as well. I did not realise what I was getting into.”

He teamed up with Mr King, and they ended up co-founding the Ethical Property Company, which five years ago moved to the Old Music Hall in Cowley Road, Oxford, having transformed it into modern offices for organisations including Reading Quest, Refugee Resource and Sustrans.

The Ethical Property Company now employs 70 people in 15 centres across the UK, plus centres in France, Belgium and the Netherlands providing office, event and retail space to charities, social enterprises, voluntary and campaign groups.

To build up the business, he raised £14m from some 1,300 investors in the UK, as well as a private offer in Belgium for 3.2 million euros.

He said: “I had to raise capital for the Ethical Property Company over the course of the years and I spent a lot of time trying to create a way for investors to trade their shares. I linked up with Café Direct and Traidcraft and we had a small share-matching service.”

But Brewin Dolphin, the investment managers who were running it, decided to discontinue the service, so there was no way for people to get their money back — nor was there any scope for new investment.

“None of us wanted to join the London Stock Exchange, because they were worried that the pressure would be only to make money and not about achieving the social good, alongside that.

“I came to the conclusion there needed to be something new and I set my heart on creating an ethical stockmarket.”

Last year, he stepped down from the Ethical Property Company to set up Ethex (motto: Make Money Do Good). He persuaded five charitable trusts to back the venture and, with help from the Big Lottery Fund, raised £500,000 — enough to last for two-and-a-half years.

Web developers White October, based in the Gallery behind the Old Music Hall, have created a website where investors can compare a range of ethical investments, from Golden Lane Housing, a Mencap venture providing homes for people with learning disabilities, to Oikocredit, which lends money to small business people in sub-Saharan Africa.

Ethex offers a shareholder management service, registrar and company secretarial services to its member businesses and already runs the Westmill Solar Co-op, based near Faringdon. With charges to investors and to businesses, he expects Ethex to be breaking even in the next few years.

Mr Hartzell points out that ‘ethical’ means different things to different people.

He said: “There are dozens of ethical investments, but they work by negative screening, ruling out things like tobacco or the arms trade. Ethex is offering investments that do positive good, which is different.

“With the majority of ethical investment funds and services, you rule out things you disagree with, but you may end up with surprising results because the investment manager chooses whatever produces the best return,” Mr Hartzell said.

“The most popular company in ethical investment fund is BG Group, which is exploiting gas and oil reserves.

“You might not want that if you are worried about climate change.”

He explained: “Ethex will do two things. Firstly, it alerts people to new share issues and bond issues which they would otherwise not be aware of. Often, by the time you find out about it, the issue is closed.

“Secondly it provides a marketplace for people to buy and sell their shares. This allows existing investors to sell if they need to, and allows other investors to pay into things that they maybe missed out on first time.”

He agrees that some of the investments listed may be risky, though others are covered by the Financial Services Compensation Scheme.

He said: “We are expecting people to put in about ten to 15 per cent of their portfolio, not the whole lot.”