Many individuals see investments as a tradeoff between their values and financial goals.
ESG investing allows individuals to grow their wealth ethically. It is possible to invest with a purpose and bring positive change in the world.
Our interview with Tim Cockerill, Investment Director at Rowan Dartington discusses the most common questions asked by our clients who are interested in responsible investing.
So, what are ESG factors and why are they relevant to investing responsibly?
“ESG factors can be seen essentially as the impact a company has on the environment, society and how well it is governed in the broadest sense, for example gender pay gap. If we are to invest responsibly then these factors must be considered when assessing companies. At the most basic level they represent risks, on another level it is about ensuring invested capital is managed with minimal negative impact and maximum positive impact.”
Do you have any case studies of companies within responsible funds who have performed well or grown in recent years?
“An appropriate case study would be Impax Asset Management, a boutique specialist manager that focuses on environmental markets. 15 years ago, the share price was below 10p, today it is circa 400p. The growth is due to its services becoming more in demand and its asset base growing. For me this epitomizes the potential in ESG investing.”
Can responsible investing still benefit me financially?
“Evidence increasingly suggests stocks with good ESG rating perform better, and in a world where we are moving towards a de-carbonised economy, for example, there are certain sectors we expect to perform well, conversely other sectors are likely to see gradual decline. ESG investment is very much about tapping into these growth areas.”
Which clients would be most suited to funds with higher ESG ratings?
“They will suit all clients, but particularly those who wish to invest responsibly. At Rowan Dartington we have several ESG funds in all our mandates irrespective of whether it is an ESG portfolio, and this is because of the opportunity they present.”
What is ‘Negative Screening’ and ‘Positive Screening’ in the context of investing?
“Negative screening (exclusions) is a filter that excludes certain stocks involved in certain industries and sectors, armaments, tobacco etc
Positive screening is when a stock is selected because of the benefits its products or services bring to minimizing environmental impact, benefiting society… for example waste management reduces landfill and recycles materials which reduce CO2 emission.”
Why is responsible investing important and relevant to me?
“The world faces major environmental and societal challenges that must be addressed, foremost is climate change – we must limit the extent the world warms by. If we do not the impacts will be extremely damaging for people, the environment, and the global economy, and it affects everyone. Additionally, these challenges are current and growing, they are not future events, consequently the importance of acting now cannot be understated.”
Our choices all have a consequence on society and the environment. Your investments can influence the way businesses operate, by investing in companies with an ethical standing whilst avoiding those damaging the world around us.
If you would like to find out more about ESG factors, and Rowan Dartington’s approach to responsible investing, arrange a no obligation consultation today on 01332 497670 or firstname.lastname@example.org
An investment with St. James’s Place or Rowan Dartington may fall as well as rise. You may get back less than you invested.
This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any strategy.