Chartered Financial Planner, Josh Richardson, discusses how the ‘Blue Planet’ effect is changing the way people invest.
Environmental, social, and governance investing
Whether it is watching dolphins playing with carrier bags, or seeing albatrosses accidentally feed their chicks discarded plastic; the majority have seen some form of nature programme which has sparked conversation about our planet.
The Blue Planet effect has resulted in many taking a step back and now, more than ever, people are more conscious of how they live their lives and spend their money. However, whilst people can readily choose what to spend their money on in the supermarket, few have considered whether their investments or pensions could be used to have a positive social or environmental impact across the globe.
A term most outside of financial services will not have come across is ESG investing, or, in its longer format, Environmental, Social, and Governance investing. This is a form of investing that seeks to have a long-term impact on society, whether that be through investment in companies who have a positive impact on the environment, or companies that are actively looking to improve the lives of their employees.
Now, whilst mainstream investments do not actively seek to be unethical in their approach, many will tread into areas that some investors may not feel comfortable supporting. This may include investment in fossil fuel production or the tobacco industry. Due to this, more and more investors are looking to see if their savings can be used to have a more positive impact, and are seeking to invest in line with their own ethical preferences.
Without advice, however, this area contains many pitfalls. Most notably is the lack of standard definition within the industry. An investment fund labelled ‘Ethical’, or perhaps ‘Sustainable’, may not be as socially or environmentally positive when you lift the bonnet.
How can we help?
At Informed Financial Planning, our clients’ ethical preferences are always accounted for when producing a recommendation for investment.
If your objective is just to make sure your money is invested to have a positive impact in the world or if you would like to actively avoid investment in specific areas, such as fossil fuels or animal testing; we can help. Please get in touch to discuss what you would like to achieve with your savings on 01482 219325, or email [email protected]
