Responsible Investing
In recent years, many investors have become increasingly concerned with ‘making a difference’ to the planet around us. With the wealth of information available on so many issues – such as global warming, poverty, gender inequality and many others – investors are more determined to help make the world a cleaner, safer, and more sustainable place to live.
But you are not just limited to picking up litter or reducing plastic usage in a bid to make a difference; your money can also go a long way.
Whether it is investing into companies which are actively helping to solve some of the biggest challenges facing our planet, investing into companies which are trying to improve sustainability standards across their industries, or simply avoiding investment into ‘unethical’ companies, investors can use their money to make a real difference to the world.
That is why we have developed a Responsible Investing Service which is designed for those who wish to use some – or all – of their money to improve the state of our planet, while still working hard to make a positive return.
What is Responsible Investing?
The term ‘responsible investing’ can mean different things to different people, depending on their own views or concerns.
Broadly, we believe that there are four types of ‘responsible’ investor, as shown below:
How to determine which type of responsible investor you are
When discussing responsible investing with our clients, we will first ask them to read our Guide to Responsible Investing followed by the completion of a short questionnaire.
The questionnaire asks you to rank how important certain considerations are for you when it comes to investing your money – for example, the importance of avoiding ethically unacceptable companies.
You will also be asked to explain, in your own words, why investing responsibly is an important consideration for you.
Upon further discussion with your Financial Planner, your answers will help to determine which type of ‘responsible investor’ you are, thereby allowing us to build a suitable responsible investment strategy for you.
The impact our clients have made so far...
Below we have illustrated the combined positive environmental & societal impact which our clients’ responsible investment have had over the last 12-months (based on total investment values as of April 2024):
The FCA’s approach to Responsible Investing
As the desire to invest responsibly continues to grow, the UK’s financial regulator, the Financial Conduct Authority (FCA) have released their own rules on how investment managers should disclose their sustainability credentials.
These rules aim to ensure that fund managers are not ‘greenwashing’ their investors (i.e. claiming to be responsible but doing nothing to back it up), while also helping investors to better understand how a fund matches their own views on responsible investing.
As part of this, the FCA have introduced four new sustainability ‘labels’. All fund managers who invest responsibly must adopt one of these labels to help investors better understand the extent of their responsible credentials.
The four labels are:
- Sustainability Impact – funds which aim to pursue sustainability objectives directly.
- Sustainability Focus – funds which invest mainly in assets that are considered to be sustainable for the environment and/or society now.
- Sustainability Improvers – funds that invest into assets which may not be sustainable now but are on a path to improving their sustainability for the environment and/or society over a period of time.
- Sustainability Mixed Goals – funds which have a mix of the above sustainability objectives.
Summary
Hopefully the above information acts as an interesting introduction to the concept of responsible investing and how your money could make a difference to the world around you.
We understand that not everybody wishes to invest in this way – while others may only wish to commit some of their money to responsible investments.
Whatever your personal views, we are confident that we can build a robust, long-term investment strategy which reflects your own values.
To discuss responsible investment with a Financial Planner, please contact us today.
