What is Responsible Investing?
Overview
Responsible investing provides an opportunity to invest in a way that not only meets your financial objectives but also your ethical, social and environmental goals.
In short, it’s thinking about the broader impact of your investment on both society and the environment.
Investing responsibly has never felt so popular as more and more people become concerned by corporate responsibility and creating a more sustainable world.
Why invest responsibly?
Many of us choose to live in a more sustainable way in our day to day lives. From growing your own vegetables to recycling to running an electric car, there are choices we can make individually. As one person, it can sometimes feel like these small choices don’t make a lot of difference.
Choosing to invest responsibly is a collective version of these daily choices. It’s about lots of individuals coming together to invest in the same way to influence change.
Typically businesses need investors. When an investment fund invests in a company, it often becomes a significant shareholder meaning it has a voice that must be listened to. This is an opportunity to push positive change and help companies become more sustainable.
Investment strategies
There are a multitude of key strategies and criteria involved in responsible investing and each fund will have it’s own parameters within which it stays.
Here are some of the common strategies used:
- ESG – Environmental, Social & Governance
The performance of a company will be assessed on ESG measures. These may include it’s carbon emissions, it’s labour practices, how diverse it is and what other socially responsible practices it has.
- Thematic investing
Investing in themes that are likely to have a significant impact on both society and the economy over the long term. These are likely to be transformative trends such as renewable energy, healthcare advancement or the development of artificial intelligence.
- Positive impact screening
This is about finding companies to invest in who have a positive impact on creating a sustainable world. Investing in things like clean energy, resource efficiency and environmental services. Including fair trade practices and companies with good employee welfare practices are likely.
- Negative screening
Conversely, this is about avoiding investing in anything deemed to be harmful. Typical activities avoided are companies whose trade includes environmental damage, weapon creation or supply and the tobacco industry.
- Engagement
Some investors prefer to avoid negative screening and prefer instead to focus on engagement. For example, investing in a company that causes environmental damage is an opportunity to bring about change. If the company is willing to engage and be influenced then the investor can be a real advocate for positive change.
Is responsible investing for me?
There’s only you who can answer that. To help, try reflecting on what day to day choices you make to be sustainable. Do you avoid fast fashion? Do you buy environmentally friendly products? Do you choose to engage with companies who have good environmental working practices?
You can also talk to your Financial Adviser to find out about the options available to you and what your investment preferences are.
If you’d like to know more about our approach to responsible investing or would like a free brochure please call us on 01482 275540 or, complete our contact form here.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
