Let's talk about ESG Investing...
Last week was Earth Week, which got us thinking about the trend we’ve seen gathering some momentum over the past few years in the investment world. That trend relates to something commonly known as ESG-, or Socially-Responsible-Investing.
ESG is short for Ethical, Social and Corporate Governance, and it refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.
Earth Week also got us thinking about how little understanding there is around ESG investing, as well as wondering whether there’s anything more we could be doing to spread the word.
Adviser and self-proclaimed ESG-Champion Nick Adamthwaite had this to say about things - “Over the past few months, I’ve seen a large uptick in the number of clients and prospects that want to have a conversation about ESG or Socially-Responsible Investing. I don’t know whether it’s as a result of the pandemic, or maybe it’s simply down to the ever-growing awareness about the need to live sustainably, but never before have I seen people be so conscious about which companies their monthly pension contributions or investments are helping to grow.
I still think there’s way more work to be done though in all honesty. I know how little attention new employees tend to give to the decisions they must make when selecting which investment option they want for their workplace pension… I was the same when I first joined the world of work. I also know how little thought a typical employer will put into reviewing the options they give their employees from that point of view, too. It’s not uncommon for a new starter to simply be asked to choose one out of of a ‘low-’, ‘medium-’ or ‘high-risk’ option, and then to not give it anymore thought until they leave that particular role… sometimes years and years in the future.
And with the younger generations tending to be, in general, more conscious and aware of the social impact of their actions and decisions, I feel like more and more people are investing their monthly workplace pension contributions into companies and causes that aren’t aligned with their social and ethical views. As an example at the more drastic end of the scale, I don’t think it’s unreasonable to suggest that there are currently hundreds - if not thousands - of practicing Vegans currently investing and contributing to the ongoing development of companies that are categorically ‘non-Vegan’”.
Nick goes on to say that “it’s up to the employees to challenge this practice. I see many workplace pension schemes that simply don’t offer the option for sustainability and socially-responsible investing without the member having to actively step outside of their comfort zone to request that their investments are switched to socially-responsible ones. What’s worse than that though, in my opinion, is the amount of people I speak to that don’t even know that investing in line with your morals is an option”.
If you feel like the options available to you through your workplace pension scheme are not aligned with your own ethical and moral views, or you’d simply like to learn a little more about ESG / Socially-Responsible Investing, don’t hesitate to get in touch and either Nick or one of our other Advisers will be happy to talk you through things.
Buying Investments can involve risk. The value of your Investments and the income from them can go down as well as up and is not guaranteed at any time. You may not get back the full amount you invested.