Ethical & Socially Responsible Investing (ESG)
Keen to learn more about ESG investing? Ethical investing starts with your ideas and principles – what you believe to be important.
Views vary from person to person, as does the approach of most ‘ethical’ funds. Some funds have very strict criteria and will screen out companies that do not meet these, whereas other funds have less strict criteria and may select the best company from a group, even if it does not meet all of the set criteria.
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For a free initial consultation with an ESG adviser, call 020 3740 5856
Our ESG investing services
Some funds are labelled as Socially Responsible Investments, some Ethical, some Sustainable and some Climate Change.
As more investors prioritise social responsibility and sustainability, ESG investments have gained popularity. There are various types of ESG investments and funds available to cater to different investment goals and values.
Here are some of the most common types:
- Socially responsible investing (SRI)
- Impact investing
- Environmental, social, and governance (ESG) integration
- Thematic investing
- Green bonds
In the nest next section we take a look at the types of ESG investments.
The types of ESG investments
Thinking about your ESG investment strategy? Here is a quick overview of the different types of investments on offer.
Socially responsible investing (SRI)
Socially responsible investing (SRI) seeks to avoid investing in companies that do not align with certain values, such as those that produce tobacco, firearms, or engage in animal testing.
Impact investing focuses on investing in companies that make a positive impact on society or the environment, such as renewable energy or sustainable agriculture.
ESG integration involves analyzing environmental, social, and governance factors in investment decisions.
Thematic investing can be an effective way to align your investments with your values and interests, allowing you to support specific causes and industries while potentially achieving financial returns.
Green bonds are fixed-income securities that not only provide financial returns but also support sustainability initiatives, making them an attractive option for investors interested in impact investing.
The ESG screening process
These screens have led to the perception that many ethical funds can underperform as they do not tend to include larger companies in industries such as tobacco, pharmaceuticals and mining (which have historically delivered strong performances).
While there is a narrower stock universe than their unconstrained counterparts, there is no evidence that following your conscience will lead to poor returns on your investment.
A broad range of ESG funds
Some funds apply screens to avoid investing in unethical areas. The strictness of these screens can vary. For example, a fund that avoids tobacco will avoid investing in tobacco companies but may invest in companies where tobacco products are sold. A fund with a strict view will avoid investing, but a fund with a more balanced approach may invest as it is not a core business area.
Talk to a specialist ESG investment adviser
Your Sterling & Law financial adviser will discuss your ideas and principles with you to help you find the right investment.
For a free initial consultation with an independent ESG investing specialist , call 020 3740 5856
Our ESG investing advisers
Looking to discuss Ethical and Socially Responsible Investing? Find a local adviser from the list below.
Sterling & Law has independent financial advisers covering London, the Home Counties,
and the South of England.
ESG investing refers to a strategy that considers a company’s environmental, social, and governance practices alongside traditional financial measures.
Environmental factors may include pollution and climate change policies. Social factors can involve labour practices and diversity, and governance factors might examine board structure and executive pay.
Examples of ESG investment sectors include sustainable energy companies and socially responsible corporations.
ESG stands for Environmental, Social, and Governance. These are three key factors used to measure the sustainability and societal impact of an investment in a company or business.
The benefits of ESG investing can include aligning investments with personal values, and reducing exposure to risks associated with poor ESG practices.
Additionally, ESG investing offers both financial and societal benefits. Financially, companies with strong ESG practices often demonstrate long-term resilience and sustainability and could be considered a good long-term investment.
Societally, it supports companies making positive environmental and social impacts, promoting ethical business practices and contributing to a more sustainable world.
The different types of ESG investing include negative screening (avoiding investments in certain industries or companies), and positive screening (seeking out companies with good ESG practices).
Additionally, impact investing (investing in companies or funds with the intention of generating positive social or environmental impact) is another type of ESG investment.
We can’t say if you ‘should’ as it’s a matter of personal choice and one that is aligned with your beliefs and wealth goals. However, to summsriase why some people choose to deploy an ESG investment strategy, here are some to consider.
Investing in ESG stocks can align your investments with your values, and potentially reduce the risk associated with poor ESG practices. It can bring an element of ‘feel-good-factor’ to your portfolio.
Furthermore, if you think about the renewable energy space being a potentially high-growth industry, there is the potential for significant returns over time. In the interests of clarity, we’re not suggesting that high returns from ESG investments are guaranteed, we are simply using the renewable energy sector as an example of potential.
Like many investment opportunities, it is always sensible to weigh up the pros and cons.
The pros of ESG investing include aligning investments with personal values, reducing exposure to risks associated with poor ESG practices, and potentially achieving long-term financial performance.
On the other hand, the cons include potential limitations on investment choices and uncertainty around the impact of ESG factors on financial performance.
Our fee structure is clear, open, and transparent. We charge a yearly fee which is a percentage of your funds under management.
Yes absolutely. The first meeting and consultation is on us. This is where we enter into a detailed fact-finding exercise where we ascertain your investment goals, your tolerance and attitude to risk, available investible assets, and long-term goals.
This initial meeting can be in the comfort of your own home, at your offices, ours, or via Zoom.
Further to ESG, we offer the following investment management services:
- Penson management and advice – personal pensions, SIPPs, and defined contribution.
- Bespoke investment management -ISAs, stocks, funds, bonds, VCTs, and EIS
Furthermore, you may be interested in our wealth management services.
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