Ketan Patel, SRI analyst at Ecclesiastical said they had seen a large inflow into their ethical fund range this year, which includes four SRI funds.
"We have surpassed what we had achieved in net sales by June last year, so we are well ahead. We are still getting the same inflows coming in so we are hoping to have a banner year," he said.
Patel said the factors sustaining ethical funds in the short term are climate change and government regulation.
"The British government has targets on how much energy the UK is going to get from wind or solar and this helps as companies can then change their mindset," he said.
He pointed to companies such as supermarket giants Tesco and Morrisons as good examples of these.
"Tesco is trying to bring solar panels into the store because it now realises it can save money. Whilst Morrison recently brought in The Carbon Trust to analysis its stores, which saved £3.4m a year."
Pointing to BP, Patel said this was an event which made investors realise they need to take environmental risk more seriously.
A spokesperson for Aegon Asset Management agreed: "This is most likely due to the fallout from the whole BP saga and consequent oil spill in the Gulf of Mexico. This has once again raised peoples' consciousness to ethical and environmental issues, but also mean't that ethical funds have benefited from performance as most cannot invest in such stocks."
Tim Cockerill, head of research at Rowan agrees and says this could be one of the reasons he has seen an increase for ethical investing.
"We have had a few enquiries in the last month or so for ethical portfolios, whether this is just coincidence or if it is a new trend is hard to say," he said.
"The BP issue comes to mind as one of the biggest and high-profile environmental disasters in North America of all time, this could have been a trigger.
"What it might have done is focus people’s attention on an industry that lots of people have money invested in, I can see that might push some investors in the ethical direction."
Data from Trustnet shows there are 68 funds with an ethical or sustainable investment focus. Over a five year period, to 11 August 2010, the best performance came from the Ecclesiastical Amity International fund, managed by Trustnet Alpha Manager Rob Hepworth.
Best performing ethical and sustainable focused funds over 5-years vs FTSE All Share
Source: Financial Express Analytics
The case for ethical investing was given a further boost by recent IMA statistics, which showed net retail sales for ethical fund were the highest seen in two and a half years.
Net retail sales of ethical funds totalled £98m in the second quarter of this year, which is well above the average of the past four quarters. In 2009, net retail sales made a loss of £8m, whilst in 2008 net retail sales were at £54m. However, the total sales so far for 2010 are still off the highs seen in 2007 when net retail sales hit £151m.
Adam Ognall, deputy chief executive of UKSIF (the sustainable investment and finance association), said the results are a very positive sign that increasing numbers of investors want to make money and make a difference [to the environment].
"As the economy continues to stutter, consumers are increasingly aware of the impact of their investments and the opportunity for their finance and investment decisions to have a positive long term impact. Modern green and ethical investment is now an attractive choice for mainstream investors," he said.
However, not everyone is a fan of ethical investing and AWD Chase de Vere's Patrick Connolly sits in this camp.
"Investment companies adopt different criteria over what is, or is not considered ethical, which means it can be very difficult for investors to construct a portfolio aligned to their ethical values," he said.
"The best managers do not tend to manage ethical funds, putting these funds at a disadvantage regarding potential performance."