You could say it all began with the Quakers, who refused to invest in companies involved in the slave trade in the 18th century.

But ethical investing really took off in the 1980s, the "me decade" better known for cocaine-fuelled excesses and the single-minded pursuit of Armani, than for musings about the true whereabouts of one's savings account.

It is now estimated that Britons invest £3bn a year in what the Americans call "socially responsible" funds.

That's a lot of money and growing fast, but it's still true that only about one per cent of our unit trust investments is ethically screened.

So anyone stung by the recent revelations that Labour has inadvertently been funding animal experiments through its pension funding may want to know more.

First of all, what is "ethical"? To some, it means not putting money into a fund which in turn invests in a company dealing in pornography. But not to others.

And we all know that one man's terrorist is another's freedom fighter.

The definition from the Ethical Investment Research Service (EIRIS) is "choosing investments that reflect your values".

It means that before you start, you have to sit down and work out exactly what are your values - or what financial advisers call your "ethical profile".

You could ask yourself: do I mind supporting a military junta? Am I interested in the fate of the bactrian camel? What about experiments on monkeys for lipsticks, or for life-saving drugs?

When you've worked out whether or not you are prepared for your pension to fund the firm which makes the machines which blow the limbs off small children, it is time to check out the companies.

This can be more difficult than it sounds.

Friends Provident, which created the UK's first ethical fund in 1984, asks what happens if a firm makes buttons which are bought by the army - does that count as funding the arms trade?

Worse, many multi-nationals are so huge, there probably isn't one person in the organisation itself that would know every aspect of what it was up to at any given time.

EIRIS has to employ a team of about 15 full-time researchers, patiently tracking the vagaries of takeovers, buyouts and mergers.

Globalisation means many companies have fingers in almost every controversial pie going.

Even the Church finds itself unable to maintain a total ban on investments in the arms trade, saying instead that it will only invest in firms whose business is less than 30% weapons.

It might be easier to go to a specialist independent financial advisor who matches your "ethical profile" to the 45 ethically-screened funds now on the market.

The funds themselves rely on ethical committees and various research bodies to track not only the behaviour of organisations, but also the ethical issues themselves.

For instance, EIRIS says South Africa is "simply no longer an issue" - unlike the 1980s when people boycotted Barclays Bank and scurried past SA wine in the supermarket, in case they were accused of bankrolling apartheid.

On the other hand, working conditions in the developing world became a huge issue a couple of years ago.

Now GM foods and crops are a new area of concern, and following Labour's recent difficulty, EIRIS expects a sudden resurgence of interest in vivisection.

Of course, your desire to avoid firms which dump baby milk could fade in the face of lower returns on your endowment mortgage.

It is usually assumed that to invest ethically, you have to accept lower growth - but that is not necessarily the case.

High performance

Recent surveys indicated that, in general, ethically-screened unit trusts performed slightly better than "normal" ones.

Of course, that means you may have to be slightly flexible in your criteria.

Jeremy Newbegin, an independent financial advisor who specialises in the ethical field, says the stricter the criteria, the more investment opportunities you rule out - so the lower the growth.

But, he says, an investor who simply wants to encourage socially responsible practices, and is making "more of a gesture than a total commitment", can make great returns.

It would even be possible to invest in about 30 of the FTSE-100 companies, he says.