£ billions, including our ISAs and pensions, are invested on the worlds Stock Markets by fund managers on our behalf. These people are in theory the owners of the companies they invest in. However, they have a duty to act in the best interests of their clients and so they manage the shares with the sole objective of achieving the maximum possible financial return. Socially responsible investment (SRI), which is also known as sustainable investing or ethical investing, is an investment strategy that looks to both maximise your investment return whilst adopting a principled approach.
SRI funds do not therefore just look at the possible profit but they also screen the investments so have criteria designed to identify the types of company they aim to avoid. These typically cover issues such as animal cruelty, arms, alcohol, environmental pollution, genetic testing, nuclear power, pornography and tobacco. Firms active in such areas are excluded.
The exclusions listed do not cover the full range. Ethical funds often share a very similar core of criteria but otherwise work from different lists. For instance, one fund might list alcohol, animal testing, arms, gambling, pornography, nuclear power and tobacco among their excluded criteria whereas another will add genetic engineering, meat and dairy production and road building.
The investment approach is not confined to the exclusion of certain sectors but has developed towards a lighter touch strategy of engaging with companies to try to persuade them change their corporate behaviour. An engagement strategy can include everything from a company's carbon footprint, to how it treats its staff, to corporate governance questions. Responsible investing is not incompatible with making a profit. Running a business responsibly goes hand-in-hand with running it effectively,
As there are different versions of SRI and not all ethical funds have the same objectives which will affect the make-up of the underlying portfolios. We can help you choose your funds depending on your preferences, and will ask you your attitude towards various SRI issues, from intensive farming and animal welfare to environmental management and technology.
Our savings and Investment service also includes:
Investment planning and portfolio management
Unit trusts and OEICs
ISAs and PEPs
Please contact us for more information