Whitechurch Blog: Investing in a Changing World

14th May 2020

Life pre the COVID-19 outbreak now seems a distant memory. Over the past few weeks, the priority of people, companies and Governments around the world has been how to get through the crisis with minimal loss of life and economic damage. As time moves on attention is now turning to what will a ‘Post COVID’ world look like?

Prior to the outbreak Climate change was high on the agenda as Governments struggled to meet the goals set out in the Paris climate agreement. Figures show that in 2018 the atmospheric concentration of CO2 and other greenhouse gases once again reached new highs.  However, since the global lockdowns began there has been a notable change in air quality around the world as we have seen pollution levels drop albeit temporarily as transportation and industry have ground to a halt. We are now seeing some Governments particularly in Europe start to put stipulations in place for companies receiving bailouts which mean they must become more environmentally friendly in order to receive the money, suggesting climate change will continue to be top of the agenda for many as we move forward.

Many companies have been keen to show they have acted in a socially responsible way throughout this crisis. This has been seen in a variety of ways from companies taking ventilator designs ‘off patent’ and sharing with other companies to increase production to those companies providing discounts or priority service to front line workers. It has also been reflected in the way companies have treated staff during the crisis i.e. have they done their best to keep them safe and where possible keep them employed. Those which have acted responsibly will have helped their brand in the long term and may see financial benefit from their actions as the economy reopens.

What does this mean for Socially Responsible Investing?

Pre COVID-19 we were seeing a substantial increase in investor interest towards Socially Responsible Investment options. We believe this will continue moving forward and investment opportunities will increase as Governments and companies look to align themselves further with the United Nations Sustainable Development Goals. The UN SDG’s have been designed to drive change globally and cover a range of environmental and social issues, many SRI and Impact funds look to map to these goals as a way of measuring the positive impact they are having.

As behavioural and consumption patterns change, such as increased working from home, a shift towards online communication, increased focus on healthcare and the security and sustainability of global supply chains alongside a transition to a low carbon economy. This all creates opportunity as many new technologies, industries and products need funding in order to meet the challenge. Many SRI funds have for a long time been focused on investing in the best companies in these areas.

Positive Impact, Positive Returns

There is growing evidence to suggest that companies who have high standards in the areas of Environmental, Social and Governance perform better overall. Implementing better practices in these areas can make businesses more efficient and mitigate risks of operational shortfalls and reputational damage. There is evidence to suggest that during the Q1 sell off some ESG and SRI funds outperformed helped by the strong ESG focus and investment into companies which were not as badly affected by the economic shutdown and in some cases benefited through the provision of solutions to the problems faced. (As per themes above)

Why talk to clients about Socially Responsible Investing (SRI)

Many of us would like to be able to reflect our personal values in our investments but have been held back in the past due to lack of choice and perceived poor performance of funds in the ‘ethical’ space.

Historically, ethical or Socially Responsible Investing (SRI) has been about excluding stocks in sectors such as tobacco, gambling and defence. These exclusions have in the past led to some periods of underperformance from ethical funds when areas such as tobacco outperformed.

Over the past few years this part of the investment market has changed dramatically, and we are seeing a rapid increase in the number of clients interested in this space. Amendments to Mifid ll expected to come into force soon will mean advisers will need to be more proactive with customers in relation to SRI considerations by asking them about their preferences. 

What we can offer?

We offer Ethical Income and Growth orientated portfolios in a range of risk levels from £3000 upwards available directly and on a number of platforms.

For clients with more bespoke needs including CGT management or particular ethical requirements we can tailor individual portfolios (Investment from £250,000).

For more articles and information including our Socially Responsible Investment Guide or to find out how we can help you and your clients please visit our website www.whitechurch.co.uk or contact a member of our Business Development Team on 0117 4521207 or DFM@whitechurch.co.uk


This publication is issued and approved by Whitechurch Securities Limited which is authorised and regulated by the Financial Conduct Authority. The views and opinions expressed in this publication are those of the Whitechurch Securities Investment Managers. Opinions are based upon information Whitechurch consider correct and reliable but are subject to change without notice. This publication is intended to provide information of a general nature and you should not treat any opinion expressed as a specific recommendation to make a particular investment or follow a particular strategy. We have made great efforts to ensure contents of the publication are correct at the date of printing and do not accept any responsibility for errors or omissions. Past performance is not a guide to future performance. Value of investments can fall and investors may get back less than they invested. All investments can incur losses of capital whilst income may fluctuate and cannot be guaranteed.

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