Sustainable Investing 

Guide to investing for good

  • Learn what is behind investor demand for ethical investing and how to construct an ethical or sustainable portfolio.
  • Consider the pros and cons of active versus passive investing.
  • Understand what are the most important ESG themes for investors.
CPD
Approx.60min
Guide to investing for good

Introduction

Climate change, gender diversity and executive pay have all been making headlines throughout 2018.

Advisers' clients may sometimes feel a bit helpless about these issues, wondering if they can really make a difference when choosing funds and investments for their portfolios.

Especially when governments, in countries like the US, are are failing to address, nay denying altogether, some of the most important environmental, social and governance (ESG) issues.

"The asset management industry has undergone a significant shift over the last decade," observes Julia Dreblow, founder of sriServices and Fund EcoMarket. 

"ESG research and responsible ownership activity, although varying in terms of quantity and quality, are now effectively hygiene factors. And behind the scenes, the UK government (and the EU) are looking to work with investors in areas such as sustainable finance and social impact investment."

She continues: "New product launches, particularly those with sustainability themes and with a focus on ‘impact’ are accelerating - as is the growth in ethical/SRI discretionary portfolio managers and portfolio planning." 

This area of investment has seemed, at times, to be rather slow in translating to the mainstream. While there are some fund management groups which have only recently entered this space, many others have been offering these types of funds for years.

Amanda Tovey, investment manager and head of SRI at Whitechurch Securities, notes: "Generally, asset managers are increasing the pressure on companies around the areas of ESG through active engagement with company management, which is evidenced by the growing number of funds incorporating ESG analysis into their methodology.

"However, a large number have been doing this for years but are now perhaps advertising it more, as investor demand in this area increases."

This guide will look at the many factors driving investor demand, as well as how advisers can help clients build an ethical or sustainable portfolio of investments. It will also weigh up the pros and cons of taking an active versus passive investing approach and, finally, what themes investors can get exposure to.

This guide is worth an indicative 60 minutes of CPD.

Contributors to this guide: Hortense Bioy, director, passive strategies and sustainability research, manager research at Morningstar; Julia Dreblow, founder of sriServices and Fund EcoMarket; Perry Rudd, head of ethical research at Rathbone Greenbank Investments; Amanda Tovey, investment manager and head of SRI at Whitechurch Securities; Jason Hollands, managing director of business development and communication at Tilney Group; John David, head of investments at Rathbone Greenbank Investments; Christopher Greenwald, head of sustainable investment research and stewardship at UBS Asset Management; Brian Dennehy, managing director of FundExpert.co.uk and Dennehy Weller & Co; Bryn Jones and Noelle Cazalis, managers of the Rathbone Ethical Bond fund; David Harrison, manager of the Rathbone Global Sustainability fund; Joshua Kendall, ESG analyst at Insight Investment, part of BNY Mellon IM; Investment Association; Triodos Bank; HSBC Global Asset Management.

Ellie Duncan is features editor of FTAdviser and Financial Adviser

In this guide

CPD
Approx.60min
  1. The European sustainable fund market saw net inflows of how much in the first half of 2018, according to Ms Bioy?

  2. Mr Rudd says there is a problem with what exactly in this space?

  3. Ms Bioy says investors should ask themselves a number of questions before approaching their adviser. Which one of these is the odd one out?

  4. Is the following statement made by Ms Dreblow true or false? "Passives have the edge when it comes to price and simplicity."

  5. The most enduring ESG investment theme over the past 15 years has been what, says Mr Greenwald?

  6. Businesses that have poor governance can put what at risk, according to Mr Jones?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Learn what is behind investor demand for ethical investing and how to construct an ethical or sustainable portfolio.
  • Consider the pros and cons of active versus passive investing.
  • Understand what are the most important ESG themes for investors.

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