What does responsible investing mean to us?
As in many industries today, the financial services sector is no stranger to the rise of socially conscious, environmentally aware customers. Responsible investing has become an area of much discussion, with different interpretations across the industry. It’s good that there is more data available but it’s not standardised and with an increasing number of rating systems it can be confusing.
A common methodology that many firms are employing is ESG - an investment policy that considers the Environmental, Social and Governance impact of the companies included in managed funds.
Whereas ratings are often limited to the published data available and rules based, ESG is a more holistic approach that requires in depth understanding of companies and investments that comprise a fund.
Having a more in depth understanding means not just looking at how a company is catagorised or which sector it is in but also understanding the types of activities they do and don't perform, for example, we specifically look at activities related the following categories:
- Fossil Fuels
- Controversial Weapons
- Adult Entertainment
If understanding what companies do and not just how they are categorised is important to you, then in addition to the ratings take the time to research funds you're investing in and understand the investment approach.