Introduction to ESG Investing
ESG investing can help you build your wealth over the long term. Whether you want the means to buy your dream house, retire in luxury or give your grandchildren a better start in life, investing in ESG funds can help you achieve your long-term financial goals. This is about investing in progressive companies that are helping to solve the world’s biggest challenges, from global warming to social inequality, and recognising that such companies are perhaps the best positioned to thrive in the future.Download our sustainable investing eBook
What is ESG investing?
To understand ESG investing, you first need to know what ESG means. ESG stands for Environment, Social and Governance.
Environment considers a company’s impact on the planet, for instance, how it is reducing its environmental impact by managing its carbon footprint or cutting its levels of pollution and waste.
Social considers the company’s impact on society. A socially responsible company will, for example, have excellent working conditions and strong regard for employee health, wellbeing and safety.
Governance considers how a company is governed, which includes the internal system practices and procedures shaping how the organisation makes decisions, stays compliant and maintains relationships with external stakeholders.
With ESG investing, you’re putting your money into ESG funds which comprise different companies, selected because of their ability to generate long-term financial returns and for their excellent credentials in the ESG areas.
Fund managers will consider ESG factors when deciding how best to place investors’ cash. Finding an ESG fund (and there are a lot out there) that meets your own personal objectives and circumstances is the job of a financial adviser.
Why should you choose ESG funds?
ESG investing helps you support the causes you care about, from fighting climate change to improving social mobility. You can dictate which problems you want to help tackle by considering the sectors and types of companies you want to support.
For example, you could be putting your money into organisations like Ford Motor Company, which is working hard to improve the environmental impact of the automotive industry. Or you could be supporting organisations such as Visa Inc, which is focused on driving financial inclusion for everyone everywhere.
That’s not to say that ESG investing isn’t focused on making money. As with any form of investing, it’s about using your money to generate a profit.
Make an impact
There are also reasons to believe that organisations with good ESG credentials are primed to perform well in the future. This is due to a myriad of factors. For instance, such businesses tend to have:
• a stronger competitive advantage
• increased customer loyalty
• reduced operational costs
• access to new growth opportunities
Changing consumer behaviours, government funding, energy waste reduction and better governance are just some of the reasons why established ESG-focused businesses are reaping these benefits. This points toward a bright future for such organisations, which gives us reason to believe that ESG funds may perform increasingly well in the future.
How do you make responsible investments?
It depends on your financial objectives and the strength of your values. If you have strong values, you can screen against social and environmental factors to make sure the funds you invest in are aligned to your moral beliefs.
You might use negative screening to do this, which can be used to exclude specific businesses and industries from your responsible investment portfolio. For example, you could exclude businesses that have a negative impact on people’s health, such as fast food chains or tobacco companies.
Another approach is positive screening, which can be used to include businesses in your portfolio based on what you care about the most, such as tackling social inequality. In which case, you would use positive screening to find companies that are helping people who are disadvantaged through their activities and policies.
If your priority is to make a profit, socially responsible investments can still help you achieve your financial goals. Established responsible businesses are primed to be successful in the future. And you can also invest in socially responsible funds alongside more traditional funds to hedge against other areas in the market that may not be doing well, helping you manage risk.
Why use a financial adviser?
Starting your ESG investment journey without a financial adviser is like completing a complicated divorce without a lawyer. The process requires many hours of in-depth research and a high level of technical expertise and experience.
At Chase de Vere, our independent advisers cut through the complexity of ESG investing, securing a rewarding financial future for you and your loved ones. They provide a highly proactive and responsive service that helps you:
• Understand what you want from ESG funds
• Respond rapidly to market changes
• Identify greenwashing and react accordingly
• Ensure your portfolio stays profitable
• Build your wealth while igniting positive progress
Achieve your financial and beneficent goals seamlessly. Along the way, build a rewarding relationship that can last across generations. With Chase de Vere, a positive and impactful financial future is yours for the taking.
We’ll help you identify what you want out of ESG investing by asking you specific questions about your financial and ethical goals. This will help us define your investment style and the type of service you need.
We’ll spend time researching the best ESG funds to go in your portfolio based on your preferences. Each fund undergoes regulatory and compliance checks for greenwashing and risk assessment.
Gain an ESG investment portfolio containing best of breed funds. You can manage your portfolio as much or as little as you like depending on your preferred style of ESG asset management.
We can keep you updated on your portfolio’s performance via regular reports. Stay in the loop with essential information, including a current valuation, Performance Commentaries and Portfolio Change notifications.