Your guide to responsible investing
It’s little surprise that there has been plenty of confusion about Responsible Investing (RI). Much of the terminology around the concept can be jargon heavy. We have created a series of insights to help investors better understand the opportunities presented by RI.
From little acorns do mighty oaks grow
After starting out with the fundamental idea of investing in ‘good’ companies and avoiding ‘bad’ ones, RI has since evolved into a powerful way to make effective investment decisions. It can deliver sustainable, long term value for clients and create a positive impact on society using insights gleaned from environmental, social and governance (ESG) data.
This approach has built significant credibility in an age when some firms can become winners almost overnight as a result of prominent trends like technological disruption. A striking example is the rapid rise of electric car manufacturer Tesla1, which although launched a century later than Ford, has in its few short years of existence already temporarily outstripped it in terms of market capitalisation2.
The shift may seem sudden but illustrates the momentum that is building for products that are deemed more responsible and less harmful to the environment. This wave of enthusiasm is quickly moving into the financial world. Investors increasingly want to understand how a company is creating value, demanding details of how an organisation’s activities are impacting the wider world.
The RI revolution
In the past, investors concerned about aspects of a company or sector, such as tobacco, arms or gambling had limited investment options. The focus was almost exclusively on public equity-oriented strategies, generally described as negative screening or ethical funds. This also created the perception that financial returns were limited.
But RI strategies have grown both in number and sophistication. Through integrated and innovative fund management techniques, RI is opening up a new world of opportunities. These will continue to improve as tools and measurement criteria evolve further, helping asset managers to more effectively mitigate risk and therefore potentially enhance financial returns.
To find out why we believe RI provides a compelling investment opportunity and the different approaches available to investors, click on the insights below.
2Source: Bloomberg, as at 30 November 2017
Why we believe RI is a compelling opportunity for investors
In recent years, the investment landscape has witnessed dramatic change as the multiple factors that companies must address to deliver long term value and mitigate risk have been redefined.
What RI approaches are available for investors?
Given the enormous scope for RI strategies, it can be a daunting task to unpack all the details around them. The range of responsible investment options can be broadly categorised into three buckets; ...
Five questions to ask your Responsible Investment manager
A considerable range of possibilities and options exist within the responsible investment (RI) universe