Sorry to disappoint you, but before you settle down with your popcorn for the next instalment of the romantic antics of Mr Green, this is not that kind of production.
Increasingly, during the course of our work with clients, we are having discussions around investing in ways that are better for the planet and the next generations futures.
We are all becoming more and more aware of the need to change to make our world a sustainable place for our children and their children, but it seems that the recent pandemic has heightened awareness, whether it is because we had a chance in lockdown to watch David Attenborough’s Blue Planet, or whether it is simply that the realisation is gaining momentum. Whatever it is we seem to have reached some sort of tipping point in peoples consciousness.
We regularly hear clients confused over the many phrases and terms for ‘greener’ investing that are thrown around by fund managers and financial authors. There are ‘ethical’ funds, ‘sustainable’ funds, ‘socially responsible’ funds, ‘Impact’ funds to name a few and more recently ‘ESG’ funds have emerged.
But how do you begin to decode the names and the individual funds actual approach and investment criteria? Well, that’s not actually that easy, but we’ll try and cut through the noise a little in the next few paragraphs.
If we start with ESG funds. This is a more recent development in the fund management world, it stands for ‘Environmental, Social and (Corporate) Governance’. Essentially it is an evaluation of a firm’s collective conscientiousness for social and environmental factors but what it represents to an investor is a movement to harness the fund managers influence over businesses they invest in and use it to drive better corporate behaviours. Not just for the planet or carbon footprint but also in other ways such as its’ way of working, treatment of workers and commitment to change.
ESG funds therefore, may not screen out some firms that stricter funds might, but would look to changes that business can make and opportunities that represents.
From an investors perspective, businesses with strong ESG credentials could be seen by some as going hand in hand with better corporate management.
The three Beaumont Wealth Ethical portfolios that we run, tend to be more ESG based, but will incorporate some aspects of the following styles of investing. That said, we have the resource and skills to tailor a portfolio for any specific client requirements, should that be the case.
So, let’s try and breakdown some of those other investment styles.
There are more names banded around in this sometimes complex investment market ‘Light green, ‘Dark Green’ and so on, but the fundamentals are often very similar as you can see. All shades of green.
What becomes critical for advisers when we look at a client specific portfolio is what is important to the client. Do they want to screen out particular types of companies, if so – what type. We have a range of tools at our disposal that enable us to filter down through the green mist and make sure we match your shade to give you a ‘clear green’.
Article by Paul Carpenter, Chartered MCSI, DipPFS
November 13, 2023
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