What’s your opinion? ESG

03 February 2020

The issues surrounding our changing climate are ever more apparent and urgent. Some are hugely passionate about the topics that surround our environment and the sustainability of our lifestyles. Others of course remain somewhat ambivalent to some or all of the many and varied issues that this important topic encompasses. This can create significant noise around how we as individuals can make changes, and each of us has our own opinion.

Thinking about, talking about and investing your money into funds to correlate with your opinion can be a challenge in itself. You might suggest it's like a CSR (Corporate Social Responsibility, topical for investment houses at the moment) process, but on an individual basis. It has been suggested that a more focused ESG (Environmental, Social and Governance) programme is the way forward for companies, as an evolution from the older CSR type objectives.

As an example, a clear description of ESG screening can be found here (noting that again there are a range of opinions on what it should include): https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp

Chapters Financial Limited is not responsible for the content of external websites and we recommend you consider your own views as to what you want to achieve.

ESG criteria are progressive for investors in looking at a company's position before investing. Indeed, it may become the standard to which all businesses aspire as investors correctly become focused on how profits really are generated and what is the 'real' human and environmental cost.

However, with this welcome progress comes concern that ESG does not go far enough, and will not become fully mainstream quickly enough, to invest in specific areas of focus and concern. Indeed, where to start is a good question. How can investments be screened to meet an investor's requirements?

For those who are passionate on the topic, they might find this blog surprising, already being well versed on how and where suitable investments through assets such as ISAs and pensions can be made. But in our experience, this is far from the norm, although with a positive note that many clients are now asking what's available and how they can be involved.

The varied investment fund descriptions that may appear in fund names and aims might include Ethical, Ecology, Green, SRI (Socially Responsible Investing), Future World and Sustainability, to name a few. It is good to note that this list of opportunities is growing.

Technology has proved to be a great help in allowing financial planners access to detailed fund and investment data. This allows us to interrogate fund sectors and individual funds to meet client requirements based on their individual objectives. This also allows us to look at fund charges and performance, which in our experience have been a concern for investors.

Whatever your opinion, and we appreciate that there are many varying views, talk to the team at Chapters Financial about how you want to be involved from an investment perspective. We were never advocates of 'all eggs in one basket', and change may take time, but these are important topics that we will all face.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS


CFP Chartered FCSI

Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899

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