Over the last few years we have seen increasing interest in reducing our impact on the planet with greater use of recycling – and even better, less use of plastics in the first place – low energy light bulbs, solar panels, electric/hybrid cars etc. So, it seems a natural step to think more about where our money is invested.
The question is can your pension and investments be doing good while you are not using them?
Ethical investing has been possible for many years, but has often suffered from jargon and confusing terminology. What exactly does investing ethically mean? Is it just avoiding companies which are harmful, or should it be about supporting companies who are doing good, and how do we agree on which areas are important and which are less so?
To bring some clarity to this conversation at Serenity we have developed two distinct ways of looking at the issue – our Earth and Positive Impact portfolios.
Existing clients will know that our core philosophy is based on evidence-based investment. Using academic research over many years we believe it is very difficult to beat markets on a consistent basis, and that attempting to do so is a pointless and expensive exercise.
Our Earth portfolios take this long-standing and successful approach, but enhance it by identifying potential risks and opportunities which result from Environmental, Social and Governance (ESG) issues.
- Environmental issues would include air and water pollution, emissions, waste management
- Social issues would include labour relations, diversity, customer satisfaction, community activity
- Governance issues would look at boardroom composition, pay structures, political lobbying
The belief is that companies which follow high quality environmental, social and governance standards are more likely to be successful and outperform their peers in the long-run. It uses an overlay of ethical consideration, but the main objective remains financial performance.
Our Positive Impact portfolios turn this on its head. The primary objective is that any investment should be beneficial to people and the planet, and capital will be allocated to companies whose products and services help solve social and environmental problems.
Investment return is still important – if it were not we would be looking at charitable gifting, which is a separate discussion – and we are financial planners, so you should expect us to invest your money effectively to meet your objectives.
We are in the brilliant position that in addition to the portfolios we have used successfully for many years we are now able to offer you the choice of enhancing this through the use of Environmental, Social and Governance criteria, or to invest your money in a truly impactful way for society and our planet. Please contact us if you would like to find out more about this exciting topic.
For me, every investment has an impact so the question is do you want that to be for good or not?
– Ian Kemp