TO JUDGE by the success of several recent share issues, many of us are happy to make little or no return from our investments.

This is not a commentary on the prospects for Prudential’s recent rights issue, or Virgin Mobile’s flotation. Close to 5,000 people were prepared this year to put up an average of about £1,000 to back Cafédirect, a company that cautioned in its prospectus that it would not pay a dividend this year.

Cafédirect is, of course, the group behind the increasingly well-known “fair-trade” coffee of the same name. Its aim is not necessarily to make money for its owners, but to pay a “social dividend”. In Cafédirect’s case, this can be accurately quantified in the £2.4 million premium over world market prices that it paid its producers in the Third World in the past 12 months.

However, all that the 4,560 investors that made it on to the Cafédirect share register have to show for it is a warm glow. The shares have yet to move from their 100p offer price, despite being “traded” on Ethex, an exchange for socially responsible companies run by Triodos Bank, in Bristol.

With only four companies quoted so far, Ethex will never be a serious contender to mainstream stock markets. It could, at a stretch, become an Ofex for the socially aware. Like Ofex, it is not a “recognised investment exchange”, so shares traded there are regarded as unquoted, which can offer useful tax benefits, such as Enterprise Investment Scheme relief for buyers.

Yet Ethex matches only buyers with sellers, so liquidity is poor and, unlike commercial markets, the price is normally set by the company, not traders. This means that investors should not expect to make their fortunes. For instance, the Triodos Renewable Energy Fund, one of the first “socially aware” companies to be traded on Ethex, has had no change in the 130p price of its shares in six years.

Joel Moreland, a former Henderson fund manager who is now equity and investment manager at Triodos, says: “We are trying to do something a little different.” Unlike, say, the Co-operative Bank, which excludes certain customers on ethical grounds, Ethex attempts to bring capital and investors into companies that are a positive force for good.

Thus, as well as the Ethical Property Company, founded to help charities to find accommodation, Ethex also provides a home for shares in the Triodos Renewable Energy Fund, which invests mainly in wind farms, and Golden Lane Housing. This last, established by Mencap, the charity, issued a £1.6 million bond last year to finance housing for people with learning disabilities. The interest rate, equivalent to one percentage point above the rate of inflation, is now 3.2 per cent, capped at 6.5 per cent.

Ethex is not the only way to buy shares with a good conscience. Traidcraft, a Christian group that offers Third World producers better prices for goods ranging from crafts and jewellery to tea and wine, has gone down the do-it-yourself route. Over the past ten years, the Gateshead company has raised more than £5 million in four share issues aimed at the public.

The latest, in 2002, followed a change of management and something of a crisis as debts threatened to spiral out of control. Tim Morgan, the finance director, says: “We got a new chief executive and did a strategy plan in 2001, and it was fairly clear we needed more share capital.”

Like Cafédirect, it mobilised its customer base, sending the word out through volunteer sales representatives, shops and its mail-order operation. The final issue in 2002 was oversubscribed and raised the £3.25 million hoped for.

Probably the pioneer of these in-house fundraising exercises was the Centre for Alternative Technology in Machynlleth, Mid Wales. It raised £1 million to develop a water-powered funicular railway to take visitors to the centre in 1990. The money was useful at the time, but it is significant that the centre now raises funds through gifts rather than offering shares.

Rick Dance, the centre’s company secretary, is ambivalent about the merits of such exercises. “As the years have gone by, more people want to sell (the shares) than buy them, and they are not the easiest things to market.”

The centre has never paid a dividend and Mr Dance adds: “It is quite difficult to market things which have a proven track record of not having any return. It is also expensive and not particularly productive for the centre to operate the matched bargain service.”

It is notable that Monkton Group, which exists to expand the market for renewable energy, listed on the more mainstream Ofex market in September. Juliet Davenport, chief executive of Monkton’s Good Energy subsidiary, says that it considered Ethex but there was insufficient proof that it could provide liquidity. “It is still quite new and we may consider it in the future,” she adds.

Clearly, socially responsible investment is not for everyone. Mark Mansley, of Rathbone Greenbank Investments, the ethical fund management arm of the quoted Rathbones group, has put his clients into some of the Triodos-sponsored issues. But they must be interested in this sort of thing and have an appetite for this type of risk, he says.

Shares in the likes of Cafédirect are not for those who want to maximise returns. Mr Mansley says: “It has certainly got an interesting investment story behind it. We are reasonably hopeful it will be at least an adequate investment, but it is fair to say we probably wouldn’t invest in it for investors where we had a purely fiduciary duty.”

Perhaps such “investments” should be thought of more as gifts. Then any financial return will come as a pleasant surprise and the main gain is merely a heightened sense of inner satisfaction.

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