The significant increase in environmental, social and governance (ESG) orientated, values-based investing is a result of changing attitudes across society.
In one of our previous blog posts, we looked at why values-based investing is so important, both locally and globally. But now we want to delve into exactly who values-based investing is for.
Where it all began
The story of ESG investing began in 2004 when the former UN Secretary-General, Kofi Annan, wrote to the CEOs of over 50 major financial institutions calling for them to take part in an initiative to integrate ESG into capital markets.
A year on, this initiative became formalised in a report titled “Who Cares Wins”, expressing their vision of a world where environmental, social and governance issues become part of companies’ overall management strategy to compete successfully.
Today, ESG issues have irreversibly altered the landscape of the finance industry. The trend of values-based investing continues to grow, with Triodos bank predicting the market will be worth £48bn by 2027.
Who’s seeking values-based investments?
- London Stock Exchange Group claim that 60% of assets managed for EU investors incorporate sustainable investment strategies. With green technologies, climate change, and social impact being three key areas of interest amongst investors.
- It is reported that 85% of companies in the S&P 500 index already actively report on ESG risk factors voluntarily.
- Euromonitor, the market research giant, have identified ‘ethical living’ as one of the 8 megatrends that will have the most impact through to 2030.
- With more people across the world recognising issues such as climate change and plastic pollution there has been an increase in consumers’ ethical standards and, as a result, increased demand for sustainable products/investments.
- Earlier this year, UBS claimed that 71% of consumers would consciously avoid buying from firms with perceived negative ESG practices.
- The growth of values-based/ethical investment opportunities has largely been driven by socially conscious millennials, who are demanding greater transparency and rewards beyond their financial goals.
- There has also been a rise in ‘resist’ investing. Last year, a third of investors claimed to be motivated to invest in an ethical fund as a result of negative events they had seen in the news.
- Overall, with ethical and values-based investing becoming ever more popular, the type of investor is so diverse that it is hard to see who is leading the way. In short, values-based investing is for everyone, since it delivers on wider issues and interests that affect us all.
Why is it important to us?
At Balance: Wealth Planning, we have always offered ethical investment solutions, seeking to encourage our clients and colleagues to do good by increasing awareness of the environmental, social and governance issues.
As part of our overall initiative to become a greener business, we have recently applied and have been accepted into the Low Carbon Business Network (LCBN). The LCBN is designed specifically to support businesses that offer green products and services and we’re excited to be working with them as part of our mission to lead the wider national and global trend towards greener investing.
As one of our Financial Planners, Krupesh Kotecha, said, “for us, being green isn’t just the latest bandwagon trend – we’re aiming for a shade evergreen“.
How can you benefit from it?
It is important to make sure your investments align with your values, and you see returns that go beyond that of your financial goals and make a positive change in the world.
Earlier this year the United Nations declared that we only have 11 years left to prevent irreversible damage from climate change.
The Sustainable Development Goals (SDGs) were set by the UN in a bid to prevent this irreversible damage. A collection of 17 global goals, designed to be a ‘blueprint to achieve a better and more sustainable future for all’; however, it will take everyone coming together to make these changes to secure our future by 2030.
The time to act is now but it doesn’t have to be difficult. You can make a real difference in the world simply by choosing values-based investing.