The social and environmental gains of a large company making a shift in the way it operates can be significant. However, explaining the benefits – and limits – of engagement is more complex than stating that a fund will simply not invest in certain companies or sectors. Divestment is an option, but it is likely to be used as a last resort.
How advisers can help to shape the future
We only have to look at the increasing number of extreme weather events (and data that shows 2020 concluded the warmest 10-year period in history) to realise that climate change is something we cannot afford to ignore. Responsible investing has a part to play in tackling climate change and ensuring that consumers can retire with a good standard of living.
If responsible investing is to become the future, and not be a short-term fad, then the involvement and expertise of the advice community is vital. That means not assuming that if a client doesn’t mention responsible investing that they are not interested in it, but exploring with a client how they picture their retirement and what, if any role, they want the power of their pension to play in shaping not just the income they receive, but the future they retire in.
Is responsible investing just a trendy phase or the start of things to come? Read our latest research report to get closer to the answers: adviser.royallondon.com/responsibleinvestment
Sarah Pennells is a consumer finance specialist at Royal London
