The average ethical fund has posted growth of 18.3 per cent compared with 13.7 per cent growth from the average non-ethical fund, according to Investment, Life & Pensions Moneyfacts.
A survey of the last 12 months shows ethical funds have also outperformed index trackers which grew 15.7 per cent and the FTSE 100 which saw 13.2 per cent growth.
Ethical funds also outstripped their non-ethical counterparts over the last three-year period with growth of 57.2 per cent compared with 52.3 per cent.
Investment, Life & Pensions Moneyfacts editor Richard Eagling says: “The strong investment returns enjoyed by ethical funds in recent years have helped to shatter the misguided belief that ethical investments will always underperform traditional investment funds and that sustainable business practices restrict company growth.
“Instead, ethical funds have outperformed both their non-ethical rivals and the FTSE 100 over the last three years. These results provide compelling evidence that those companies who adopt sustainable practices should be tomorrow’s winners.”