It is by no means a new concept but the number of open-ended investment vehicles putting sustainability and environmental issues at the centre of their approaches has been on the increase.

A search of IMA funds with the words ‘ethical’, ‘sustainable’, ‘sustainability’ or ‘responsible’ in their names throws up 46 funds. These include the £81.8m Old Mutual Ethical fund managed by Impax Asset Management. It aims to achieve capital growth and income through investing in international securities issued by “companies that demonstrate sound ethical practices”. Among its top-10 holdings are water technology company Watts Industries and water utility and waste management firm Pennon Group.

For some funds, what they omit from their portfolios is as important as what’s included. The £67m Jupiter Responsible Income fund, run by Chris Watt (pictured), states that it aims to invest in companies that are considered by its manager to be “responding positively and profiting from its challenges of environmental sustainability or are making a positive commitment of social wellbeing”. On its factsheet, the fund notes that it specifically avoids exposure to companies associated with armaments, tobacco, nuclear power and animal testing.

The £116.6m Family Charities Ethical Trust takes a slightly different approach, as it sets out to achieve growth by investing in the shares of companies that make up the FTSE4Good UK 50 index. To qualify for this index, companies are required to demonstrate a range of good practices. These include: a commitment to environmental sustainability, mitigating climate change, countering bribery, supporting human rights and ensuring good supply-chain labour standards. The top-10 holdings in the trust include Diageo, Vodafone Group and HSBC.

In the 12 months to September 23 2014, the FTSE4Good UK 50 index generated a modest 5.05 per cent return, according to data from FE Analytics. However, the FTSE4Good Global 100 index delivered a better 11.97 per cent over the same period.

Gerry Ferguson, manager of the Swip Property Trust, reckons sustainability has become something of a buzzword.

He says: “We have all become more environmentally conscious in recent decades and this is reflected in our everyday lives – from how we dispose of waste, the packaging we use, the kind of cars we drive, to how we heat and insulate our homes. All these decisions have an effect on the environment – positively or negatively.”

He explains that the Swip real estate team considers several factors before buying, leasing or renovating a property, including energy performance and flood risks, as well as the water and electricity consumption of its buildings.

Mr Ferguson adds: “Commercial property has a significant environmental impact. It accounts for around 14 per cent of the UK’s carbon dioxide emissions and has a material effect on water use and the amount of waste that is sent to landfill. That said, sustainability also takes into account wider socioeconomic considerations.”

In a world where people are under pressure by governments at a local and national level to become more engaged with environmental and ethical issues, investors may want to consider how sustainable their investment portfolios are.

Ellie Duncan is deputy features editor at Investment Adviser