THE MAJORITY of Scottish investors want to back companies that make a positive contribution to society and the environment, as well as making money, yet most have never been offered ethical or sustainable investments, with more than half saying they do not know where their money ends up.

That is the upshot of new research from ethical bank Triodos, published to coincide with Good Money Week, a national campaign that aims to put responsible finance back on the agenda.

According to Triodos managing director Bevis Watts the findings show that most investors understand the power of money as a powerful tool for change.

“They are looking for investment opportunities that allow them to support pioneering and innovative companies making a positive difference, while receiving good long-term returns,” he said.

But John Fleetwood, director of independent advisers 3D Investing, said: “While it’s encouraging to see further evidence of the growing demand for sustainable and responsible investment opportunities, the fact that two thirds of investors have never been offered them suggests a worrying disconnect.”

He added: “Funds that uphold environmental, social and governance standards are now outperforming those that don’t by a significant margin, yet for some reason the majority of advisers are not actively promoting ethical funds.”

Recent research from Moneyfacts confirmed that the average ethical fund has outperformed the average non-ethical fund over one, three and five years - though not over 10 years. But the amount invested in ethical options remains stubbornly low at 1.2per cent of total retail funds.

Research published this week by the Wisdom Council found that 60 per cent of millennials – those aged between 18 and 34 year olds – would be willing to invest in a principled fund if it was easily available while a third were interested in doing so via their pension.

Amanda Young, head of responsible investing at Aberdeen Standard Investments, which has £1 billion of assets in its ethical funds, commented: “There are plenty of customers who don’t see themselves as ethical but as having a set of values. We have to articulate clearly what these funds do. It’s horrifying how many funds out there don’t publish their policies.”

She added: “More broadly, particularly with millennials, the financial industry isn’t trusted. We need to build that trust back up.”

Kames Capital, another Edinburgh-based manager with a strong record in ethical funds, joined in with a warning to investors not to rely on tracker funds for their principled investing.

Head of research Ryan Smith said many trackers were over-invested in those large-cap companies that pumped out the most information on their environmental social and governance (ESG) practices.

“Focusing predominantly on the ESG disclosures that companies make can result in a bias towards certain sectors, style or markets, while overlooking other good opportunities,” he said.

For Camilla Ritchie, senior investment manager at 7IM, the lines between sustainable and ethical “can be quite blurry”, meaning it is “important investors look at what rules the manager applies”.

She used electric cars as a case in point, following the recent announcement from the inventor James Dyson that he expects to have an electric car in production by 2020.

“Whilst this is welcome news to urban dwellers, if the electricity charging the batteries is generated by coal-fired power stations, pollution is still happening – just in a different place,” she said.

Juliet Schooling Latter, director of fund shop FundCalibre, commented: “Trump's tearing up of the climate change agreement and Sports Direct's poor treatment of employees have both made the headlines in recent months – underlining the fact that environmental and social issues are very much front of mind."

She recommended funds such as Edentree Amity UK, a pioneer in the sector, which invests in a large number of smaller companies; Rathbone Ethical Bond, which excludes so-called sin and looks for at least one positive attribute in its stock picks; and Standard Life Investments UK Ethical.

A recently launched opportunity is Energise Africa, an initiative enabling UK investors to “take a stake in life-changing solar systems in homes in Africa potentially returning up to six per cent annually”.

Investors can deposit a minimum of £50 in different projects and can choose the location and term of their investment over two to three years. Online platform Lendahand holds the investment in an Innovative Finance ISA so returns are tax free.

According to Energise Africa 600 million people in sub-Saharan Africa do not have access to electricity and it aims to bring affordable, clean energy and potential economic opportunity to tens of thousands of families who pay for the system over one to two years then own it outright.