Investing responsibly and sustainably

Once a niche approach thought to come at the expense of returns, Environmental, Social and Governance (ESG) strategies have proven that they can potentially be rewarding. If you’re someone who wants to make a positive difference, you might be interested to know how you, your money and the things you care about could all benefit from sustainable investing.

The coronavirus (COVID-19) pandemic has shown the fragility of the planet, its complexity and interconnectedness in terms of demand and supply in trade and commerce, and how these can be under threat if not sustainable. ESG investing was already on a trajectory to reshape the investment landscape in this new decade, but the COVID-19 outbreak has quickened the pace of this reshaping.

Today, we’re seeing our world change faster than ever before, as economic, geo-political and environmental challenges abound. And as investor momentum builds, some argue that companies can no longer afford to discount their ESG ratings.


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Investors are increasingly aware that it is possible and increasingly necessary to make a profit that positively and proactively protects people and the planet.

Guide to ESG Investing

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Three pillars of ESG Investing

1. Environmental
Investors, consumers and governments are placing renewed emphasis on climate change and sustainability. This factor examines the extent to which a company is taking a ‘green’ approach. The number of potential criteria within the environmental factor is vast. It might, for instance, involve analysing how dependent a business is on fossil fuels, how much waste it's producing or how it treats animals.

Alternatively, it might look at any significant environmental risks that a business is taking, such as if it regularly fails to meet government regulations. Factors include carbon emissions, water usage, pollution, packaging waste, sustainable building, land usage and energy efficiency.

2. Social
This examines how the company manages its relationships with people including employees, suppliers, customers and local communities. In terms of employees, this criteria might include whether a business has any diversity or inclusiveness policies, or how it treats its staff. When it comes to suppliers, this assesses the businesses a firm works with, for example, whether a manufacturer outsources production to factories with poor practices. Treating customers fairly is also likely to have a long-term impact on performance and may cover whether the business has sufficient consumer protection in place.

Many consumers and investors want businesses to benefit society, so an ESG investor may look at whether a company helps people it doesn’t necessarily buy from, sell to or employ. Factors include employee health and safety, supply chain labour standards, privacy and data security, product safety and employee developments.

3. Governance
The reasoning behind analysing a company’s governance practices is clear. A business that is run properly is more likely to succeed over the long term than one that isn’t. When it comes to assessing a company’s governance, common criteria can include whether it uses open and transparent accounting practices or whether shareholders can vote on important decisions.

It also looks at how much it pays its board, including bonuses, board diversity, and how much it spends on developing new products and services. Factors include business ethics, corruption and political instability, conflicts of interest, and tax transparency.

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If you would like to talk to us about ESG investing or your wealth management and investment plans, please do get in touch for a no-obligation initial consultation.

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