Before the world paused due to Covid-19, the headlines were full of warnings that we all need to adapt our lifestyles to become more sustainable, to avoid catastrophic consequences.
While we’re not out of the woods in terms of conquering the virus, restrictions are being eased globally and it will be interesting to see if the positive environmental impacts of being in lockdown leave a lasting legacy. Will people return to previous habits and ways of working, or has this experience been a catalyst for positive, permanent change?
Investments is one area where people can make decisions about how their money is put to work in a way that has a positive impact.
Environmental, Social and Governance (ESG) investing has become one of the hot topics and funds that fall under this heading have, generally, performed well by comparison to others in recent times.
Back in 2017 we launched our Ethical Emphasis portfolios, which were designed to meet the increasing demand for this type of investment option. Recently, we’ve been applying a spotlight to the whole subject of ESG, finalising our Responsible Investment Policy and reviewing our terminology. We’re also working on a white paper, which is due for publication this summer.
What exactly do we mean when we talk about responsible investing and what’s the best way to describe it?
Rebrand
One of the outcomes is we’ve decided to rebrand Ethical Emphasis to Sustainable World.
We’ve done this because:
- We feel that the term ‘Ethical’ is slightly outdated, rather moralistic and hard to clearly define, due to the varying levels of ‘green’.
- ‘Ethical’ also implies the use of negative screens to exclude stocks, rather than positively including companies that provide a net benefit to society and the planet.
- ‘Sustainable’ is more aligned with a positive inclusion aim.
The term “Sustainability Focus” has been clearly defined by the Investment Association in their Responsible Investment Framework as “approaches that select and include investments on the basis of fulfilling certain sustainability criteria and/or delivering on specific, measurable sustainability outcomes. Investments are chosen on a basis of their economic activities (what they produce/what services they deliver) and their business conduct (how they deliver their products and services)”.
This definition aligns very well with the aims of our portfolio, so adopting a clear ‘sustainability’ badge feels like a natural transition for us.
With travel restrictions being lifted, shops opening and even foreign travel potentially coming back as an option, it will be very interesting to see just how much of an impact the lockdown months will have on people’s appetite to change for a more sustainable world and how this translates in to investment demand.
Whatever happens, we’re ready.
