Your money: Naomi Kane

In these eco-friendly days, more people are keen to align their principles with their profits, and the market for ethical investments is booming. Investors poured almost £9 billion into ethical funds last year a jump from £1.5bn in 1997 according to Ethical Investment Research Services (Eiris).

Mark Robertson of Eiris says: "Growing consumer interest in issues like climate change, human rights, fair trade and poverty continues to drive demand for green and ethical investments. Over the past few years, we've seen a huge increase in the amount of money invested ethically, with many more Britons choosing green and ethical options when managing their finances."

It's not just investment funds becoming more eco-friendly. You can now take out an ethical savings account, insurance policy, credit card - even mortgages are turning green. The Sunday Herald outlines the ethical alternatives.

Investment funds There are more than 100 ethical funds on the market, but some are more saintly than others. Julian Parrott of Ethical Futures, an independent financial adviser (IFA) based in Edinburgh, says: "Some funds screen more rigidly than others, or focus on a particular issue, such as climate change. An IFA will take the client through the various ethical criteria to find a suitable fund or funds." Schroders, for example, launched a Global Climate Change fund in September last year, picking up on the current concerns about global warming. Parrott says: "Investors should be aware that these funds are not always screened along normal ethical criteria. You might well find that nuclear power is deemed to be a clean energy technology', unguarded investment in China will be common, or a fuel cell company will have key clients in the defence industry."

Do ethical funds perform as well as mainstream investments? F&C Stewardship International, launched back in 1987, is one of the most well-known ethical funds. It is up 60% over the past five years, compared with the sector average rise of 73%. If you look over one year, the sector is down 3.4%, but the fund has managed to drop only 1.2%. Parrott says: "There are, of course, good funds and bad funds in any sector. But long-term studies suggest that ethical funds are potentially as rewarding as their conventional counterparts."

Just one word of warning. The ethical sector tends to work to a different cycle from the mainstream sector. At the moment, for example, mining and oil stocks are driving the FTSE index, but many are excluded from ethical funds. So if you are studying performance data, make sure you look back over at least five years.

Savings accounts When it comes to savings accounts, your principles come at a price. Ethical savers are limited to a select group of banks and building societies, and better rates are on offer in the mainstream market.

The Co-operative Bank is well known for its ethical credentials. The bank offers a range of savings accounts, including a cash Isa at 4.75%. Alternatively, you could open an account with its internet subsidiary Smile.

The Ecology building society was set up in 1981 and promotes ecological building practices. It too offers a range of savings accounts, and its Earthwise cash Isa pays 4.1%. Or there's Triodos Bank, which finances only ethical projects. You can earn 4.35% in its cash Isa.

Compare the rates with an ordinary account and you might be disappointed: the best-buy mainstream Isas pay interest of 6% or more.

Credit cards The Co-op and Smile offer credit cards, but you will pay over the odds for your ethical principles. The Smile Classic Visa, for example, charges interest of 20.9%. A number of mainstream card firms have jumped on the green bandwagon. Barclaycard, for example, is offering a Breathe card that donates 50% of its net profits to projects that tackle climate change. There is a 0% offer on balance transfers for 12 months, although a 2.5% transfer fee applies. The standard interest rate is 14.9%.

If you are prepared to take out an ordinary credit card, you can still get 0% deals on balance transfers and purchases. So why not donate some of the money you save on credit interest to a worthy cause of your choice?

Mortgages Customers who are searching for a truly ethical mortgage are limited to a small number of lenders such as Co-op Bank and the Ecology building society. Norwich & Peterborough also offers a range of green mortgages for energy-efficient homes. The building society will also plant 40 trees every time a customer takes out a green home loan. But the rates are relatively high. Borrowers with a new-build property would pay a discounted rate of 6.55%.

If you go to a mainstream lender, you could get a discounted rate of 5.63%, such as at HSBC. You could then put the savings towards improving the energy efficiency of your home.

Insurance Again, the Co-op dominates the market. The website www.ibuyeco.co.uk will also pay to offset all of your car's carbon emission for the duration of your motor insurance policy. But hurry - the offer ends on June 30.