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Environmental, social and governance (ESG) investing

Even as we watch Covid-19 continue to ravage the globe, thoughts are formulating around what the future might hold and what the world might look like in the coming years. One area that certainly has not gone away is climate change and many are wondering whether the rebuilding can be done on a more sustainable basis globally.

Whilst we do not expect continuing pictures of a smog-free Beijing to become an immediate normality, the benefits of a cleaner, greener world have been evident and the immediacy of the problem seems to be a message that is being communicated more frequently and more vociferously.

Money is moving more towards investments in creating solutions to the world’s problems at an increasing pace and we, as advisers, are seeing an increase in offerings to clients. For years the ethical landscape was the preserve of specialised managers, where now we are seeing more and more mainstream investment houses bringing out solutions across a wide range of options.

We are at a tipping point where more and more money will be put into funds and investments generally where the outcome is not purely measured in profit. The UK is pretty far behind other major investment markets, namely the US and the EU in terms of capital directed to sustainable investing and we need to catch up. Alongside the environmental and social benefits, this space is forward looking and will provide the companies that will bring the transition to a new era of energy and consumption.

The options used to be pretty limited when a client wanted to ensure their ethical considerations were met within their investments and mostly consisted of excluding the usual suspects of arms, alcohol and tobacco etc. Today’s investments provide much greater focus on engaging with companies to ensure good governance and investing in companies and assets that provide solutions for the future problems of energy generation, healthcare and cleaning up the mess we’ve created to name a few.

For us, the conversation starts with what is important to the client. Each client will have a thought on the environment or social issues. For some, this does not translate into a desire to direct their savings into something that will help – that’s been the norm for decades. But we are seeing an increasing number of people who want to do something different. If that’s the case then we need to be able to understand what this is and find the right match. In the future, it could well be the norm for some of a client’s investments to be put to use in this space and for the investment world to be opt out instead of opt in where it sits currently. We are not there yet, so if you want to have a conversation about how your money can be invested alongside your values , then we would be happy to chat email enquiries@cowgills.co.uk and one of our team will be in touch.

Disclaimer

The value of your investment can fall as well as rise.

Wealth Management
Posted by Phil Hart
17th June, 2020
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