After a decade and a half of being out in the cold, ethical funds are about to celebrate their coming of age.
They are no longer just for the sandal-wearing, brown rice-eating set who want something better than the building society without the guilt trip of full capitalism.
They are starting to make a real impact on share prices - and that in turn has an effect on other investment thinking. Mainstream funds are increasingly having to take note of ethical investment decisions even when they do not subscribe to them. Ethical principles are acting on companies everywhere, from the Bank of Scotland to Monsanto via Marks & Spencer.
From July 3, pension funds must disclose in their Statement of Investment Principles "the extent (if at all) to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments".
Mark Manley of the socially responsible investment consultants Claros, who is author of the recently published Socially Responsible Investment: A Guide for Pension Funds and Institutional Investors, says: "It is clear the government is looking for a serious response from the pensions industry, and although the regulation does not directly require any action on SRI [socially responsible investment], its real power is that it does require trustees to consider these issues properly and thoroughly."
But there's more to it than this regulation. Pension scheme members prefer a more ethical approach.
A survey from the Ethical Investment Research Service (Eiris) shows that 77% of members would like to see their pension fund invested ethically if it makes no difference to returns.
Mr Manley adds that this "may overstate the interest but there is undoubtedly a growing awareness of, and interest in, socially responsible investment".
The risks of being unaware of ethical issues surrounding one's investments are growing. Campaigning organisations are increasing in financial understanding and are more than prepared to challenge institutions which invest in companies they consider undesirable.
Earlier this year, Friends of the Earth named and shamed insurance firms that invested in stocks of companies whose activities, according to FoE, were likely to damage the planet. All this could help push up prices of ethically approved stocks.
Most believe SRI involves a trade off in performance; there has been long-term evidence to show this. But Mr Manley believes appropriate approaches to SRI can actually enhance performance.
Matthew Harragin, the ethical investment director at stockbrokers Rathbones, says: "The ethical dimension now has to be discussed, and once it is officially on the agenda, it is far harder to ignore. Pension trustees who go hell for leather for companies causing pollution or selling arms to all and sundry may have some explaining to do."
He cites the way in which share prices reacted to the GM food issue as one example of this. Iceland, which has taken a very anti-GM line, was rewarded with a share price which has outperformed competitors despite the recent lack of enthusiasm for its takeover of Booker.
Monsanto, at the heart of the GM food debate, is now being swallowed up by rivals - helped on its way by the likes of Calvert, the US ethical managers who have linked up with Murray Johnstone to direct the Murray Ethical World funds.
US ethical managers take a very hard line with companies they disapprove of - often threatening to mobilise the stock they hold in non-ethical funds as well.
Mr Harragin also took an ethical stance this time last year, when the Bank of Scot land planned a link-up with the rightwing US evangelist Pat Robertson. There were substantial protests from gays, Catholics, ethnic minorities and women, who felt under attack. Ethical investors protested and, in many cases, sold their shares.
"This was real money speaking so even those who dismissed the protesters as cranks had to sit up and take notice," Mr Harragin says.
Bank of Scotland shares have since lost a third of their value - more than many banks. Worse, the one-time ethical favourite will now have to work very hard to get back into favour.
Marks & Spencer was also a top ethical choice. No longer. Leaving aside the problem of frumpy fashions, green investors were outraged by its stance on GM food. It first ignored the issue and then treated it more lightly than rival groups. Ethical investors were also unhappy at the way it ended long-standing contracts with British textile firms such as William Baird. "From ethical paragons, they risk becoming ethical pariahs," says Mr Harragin.
But BP Amoco - once beyond the pale - could be back on the agenda for "light green" funds which are prepared to buy shares in companies which are making progress. It is now ready to negotiate with groups such as Greenpeace, a move that also forced its rival Shell into serious talks with environmental groups.
Whatever the end result, huge multinationals now have to take notice of green factors - or risk their share price dropping.
