Ethical Investing & ESG
A strategy that seeks both financial return and to effect positive social change
Ethical investing as an additional consideration
Ethical investing has seen a massive change in recent years. Investors that opt for ethical, sustainable, environmental and socially responsible investments put their money in companies that try to make the world a better place. There isn’t a better time to become involved in this fast growing sector.
Businesses that lack the ability to demonstrate corporate social responsibility (CSR), or those trading in arms or addictive substances are seeing a backlash from investors. For example, following the Deepwater Horizon oil spill in the Gulf of Mexico, BP’s share price fell by 50%. This demonstrates that investors can jump ship quickly in the face of such events.
Sustainable investing can have a positive impact for the long term health of the planet in addition to a hugely beneficial social impact. Investing in companies that think and operate along these same lines as you, and avoiding investments in those that don’t, provides more than a straightforward return.
At SIP Wealth Management, we offer ethical options for all our financial products, placing your wishes at the front of your investment strategy.
Speak to us about Ethical Investing on 01792 720 200Whether you’re just curious about what options are available to you, or if you’re strongly opposed or for certain investment options, we’d love to hear from you.
Make an ethical investing enquiry now.
ESG (Environmental, Social and Governance)
ESG is how a particular company operates and should form the basis of non-financial decisions. ESG is not about what a company does, but how it does it.
Taking into account the impact companies have on the environment, now and into the future.
- How they manage waste
- How they source raw materials
- How they affect eco-systems
- How they use/generate energy
Taking into account how companies impact people they interact with
- Human rights
- Employee rights
- Corporate citizenship
- Consumer protection
Takes into consideration the structures and processes by which company is managed by its leadership
- Company Ethics
- Equality within the workplace
- Health & Safety
- Shareholder accountability and rights
SRI (Socially Responsible Investing)
Socially Responsible Investing is an approach to investment that considers the good of the environment as well as other social factors. It’s a term that’s often used in conjunction with Environmental, Social & Governance (ESG), with this as a key indicator for how a company operates.
Frequently Asked Questions (FAQ)
No, Socially Responsible Investing is an umbrella term for a host of ethical investment options. Environment, Sustainability & Governance sets out the standards and procedures of the companies in which you can choose to invest.
Corporate governance is the collection of mechanisms, processes and relations by which corporations are controlled and operated. Governance structures identify the rights and responsibilities of participants within a corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders). These structures include the rules and procedures for making decisions in corporate affairs.
Positive screening means that rather than excluding companies, investors select companies that set positive examples of environmentally friendly products and socially responsible business practices.
Negative screening means excluding companies that do not comply with specific, pre-set social or environmental criteria. Examples are mutual funds that exclude companies involved in the production of alcohol, tobacco or gambling products, also referred to as ‘sin stocks’.
An investment approach that focuses on certain areas of activity, in this context one or more specific ESG categories. Examples of themes include resource scarcity, renewable energy and equal opportunities. By identifying and harnessing themes, investors hope to benefit from higher growth or profitability in those areas.