New shares offer for ethical firm

Buying shares is meant to be a way of making your money grow.

Even in these days of falling markets, the principle still holds - invest in shares that you think will rise, in order to get a good return on your cash.

So are people going to be clamouring for shares in a company that thinks profits should not be the main reason for investing?

The fair trade company Traidcraft reckons they will.

It is trying to raise £3.25m ($5m) by offering shares to the public in London but, as the company itself says, this is no ordinary issue of shares.

Traidcraft intends to provide investors with financial returns.

But it says the principal return for shareholders will be the knowledge that they are helping poor producers and their communities to fight poverty.

Paying a dividend

"We want people to invest, not because they think they're going to make a lot of money out of us but because of what we can do for the sake of poor people," says Traidcraft's chief executive Paul Chandler.

"Always our priority is going to be on returning maximum value to producers in the third world.

"But we hope to pay dividends as well," he adds.

The company, founded more than 20 years ago, is now the UK's biggest fair trade organisation.

Its aim is to help producers in less developed countries by giving them a fair price for goods ranging from coffee and chocolates to crafts.

These are sold in churches, in supermarkets and through catalogues.

Failing the ethical test

Mr Chandler says that Traidcraft is already holding its own in the market and he thinks its success is sending out a strong signal.

"There is a growing consumer interest in ethical companies and the big commercial companies are beginning to notice this and to realise that they too should be getting involved in fair trade.

"We now see some of the major supermarkets developing own brand fair-trade products, for example," he says.

The growing interest in ethical investing prompted the launch of FTSE 4 Good, an index containing only businesses that met targets on the environment, social responsibility, stakeholder relations and human rights.

It has just carried out its half-year index rejig and the oil and gas services group Abbot has been dropped for failing to meet human rights and stakeholder targets.

The building firm Heywood Williams has been dropped for failing to meet stakeholder criteria.

And the Swiss watchmaker Swatch has been dropped from the FTSE 4 Good Europe index for the same reason.

Among those gaining entry to the index were National Grid, Corus and Tate & Lyle.

Targeting textiles

Further evidence that people want to use their money to help others has come from the ethical bank Triodos.

A poll conducted for Triodos by NOP found that almost two-thirds of those questioned thought that savings should benefit society as well as paying interest.

But while ethical investing has attracted more interest, there is still a way to go for companies such as Traidcraft.

"One of the biggest areas we'd like to make breakthroughs in is in the whole area of textiles and manufacturing of cotton," says Mr Chandler.

"We're looking at the whole chain of supply through to textiles that are then used in this country."