22nd April 2021
Every day we are confronted with mounting evidence of the damage we are doing to the planet through climate change and pollution, whilst social problems such as lack of affordable housing, poverty and social divide increase at both local and global levels. All the while a growing global population is increasing demand on resources such as food, water, and healthcare.
Whilst people have become conscious about their lifestyle choices and how they can impact the planet, it is only in recent years people have started to think more about the impact of their savings and investments. The focus on climate change since the Paris Agreement has led to pressure on many of the big pension funds to divest and there has been an exodus from stocks in the tobacco and oil and mining sectors. However, it is not just about divestment, a lot of the sustainable investment funds also focus on investing the money into companies which provides goods and services which are a force for environmental and/or social change this is termed ‘positive impact’ or ‘impact investing’ and managers need to demonstrate through their reporting how these companies are having an impact. This can either be through ‘thematic investment’ where the focus of the fund strategy is on a particular area such as Renewable energy, transitioning to a low carbon economy or improving healthcare or can be through more general ‘impact’ funds which invest in a wide range of companies and sectors.
Sustainable funds also consider the wider behaviours of the company through looking at the environmental, social and governance practices (ESG). You may have a company producing great environmental products but if they are treating their employees badly through poor working practices and very low wages this does not make them an attractive investment in this space. The idea of ESG analysis is to ensure that companies are implementing best practice (beyond best practice) when it comes to the environment, their employees and supply chains and the communities they operate in and that the board and management are behaving in a transparent and ethical way.
Investment managers also look to ‘actively engage’ with the companies they invest in through voting at shareholder events and also direct communication with the company management around their work and governance practices sharing ideas and best practices.
To find out more about how you can invest in sustainable strategies please contact our Business Development Team at:
T: 0117 452 1207
Important Notes: This publication is approved by Whitechurch Securities Limited which is authorised and regulated by the Financial Conduct Authority. All contents of this publication are correct at the date of printing. We have made great efforts to ensure the accuracy of the information provided and do not accept responsibility for errors or omissions. This publication is intended to provide helpful information of a general nature and is not a specific recommendation to invest. The contents may not be suitable for everyone. We recommend you take professional advice before entering into any obligations or transactions. Past performance is not necessarily a guide to future performance. Investment returns cannot be guaranteed and you may not get back the full amount you invested. The stockmarket should not be considered as a suitable place for short-term investments. Levels and bases of, and reliefs from, taxation are subject to change and values depend on the circumstances of the investor.
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