Understanding Investment Risk Management22nd June 2016
Remote Financial Advice During Lockdown22nd June 2016
Ever considered investing ethically? Not sure what it is or what it means?
As responsible financial advisors at Godiva Wealth Management, our job is to give you sound financial advice that not only matches your monetary aspirations but is also aligned to your ethical and environmental goals.
Evidence suggests that growth in ethical investing is linked to the rise in social causes like climate change and human rights. Although It is worth pointing out investing ethically is not new. In the early 19th Century religious groups such as the Quakers and Methodists would shun ‘sin stocks’ such as tobacco and alcohol.
In short, Socially Responsible Investing (SRI) can be categorised as the practice of selecting investments based on ethical or moral principles. As mentioned, ethical investors typically avoid investments from stocks and companies involved with gambling, alcohol, smoking, or firearms.
There was much furore a couple of years ago when it was revealed that UK Council pension funds were heavily investing (£1.7 billion) in tobacco brands such as British American Tobacco and Philip Morris. West Yorkshire Council was deemed to be the worst of the bunch having invested more than £284 million.
The shift towards Socially Responsible Investing is definitely gaining momentum and is being positively encouraged. Last year the governor of the Bank of England Mark Carney joined the ethical investment debate. He urged investors “to integrate sustainability into their own portfolio management”.
It certainly seems like this trend has gained plenty of traction. According to recent data, there is growing evidence that environmentally focused investing – although not initially attractive to City traders – is becoming mainstream.
Some of the world’s most prominent fund managers are launching ethical index funds aimed at UK investors.
Researchers examined 745 sustainable funds and compared them against 4,150 traditional funds, and found they matched or beat returns in all categories – whether bonds or shares, UK or abroad.
There is a school of thought that employing an ethical investment strategy could mean sacrificing optimal financial gains – it is certainly worth asking the question to a financial advisor. Rest assured that Godiva Wealth Management will do our due diligence and ensure that all your concerns are addressed.
So, we know it is both lucrative and socially responsible to be seeking financial advice in order to broaden your ethical portfolios. But let us find out a little bit more about the terminology that is used to describe these types of investments.
At this point, it is worth diving into some of the terms associated with ethical investments and giving you a brief overview:
Socially Responsible investing
ESG (Environmental, social and governance)
Socially responsible investing
An investment strategy which looks at financial returns as well as the social good of a company. The focus here is on ensuring investments meet standards of transparency and accountability.
ESG is defined as environmental, social and governance. Investors who employ this strategy examine criteria within these three categories to analyse stocks. Issues such as Human Rights, decarbonisation, and general societal Issues are examined
This looks at a firm’s environmental impact or Carbon footprint as well as its use of single-use plastics. Lately, a lot of companies have revised the way they power their operations, implementing Bio-mass and solar panels.
The recent Black Lives Matter protest is an example of how a company’s business can be influenced by societal events, having a direct impact on working conditions and local community interests and projects.
This is a fundamental aspect of a firm’s operations. Assessments are made regarding the company’s use of accounting standards, transparent practices and managing conflicts of interest. It ensures that a company self regulates ensuring market standards.
As a responsible Financial Advisor, it is our job to keep things simple. If any of these ethical investment strategies appeal, please get in touch with Godiva Wealth Management. We are ideally positioned to tailor investment advice that can fulfil your wishes, especially when it comes to pension advice – remember you can create socially responsible investments!
The value of investments can go down as well as up and you may get back less than the amount invested.