Responsible investment is an area of growing importance for many investors. It’s only natural that we should each want to consider the impact of the companies and funds that we invest in on the world around us, which is why we take it very seriously at RDS Financial Planning.
WHAT IS RESPONSIBLE INVESTMENT?
When using the term`responsible investment’ we mean an investment strategy or practice which incorporates environmental, social and governance (ESG) factors.
When contemplating ESG, many of us initially think of environmental factors such as resource, water and land use, biodiversity, pollution, atmospheric emissions, climate change and waste. However, environmental factors constitute only the `E’ of ESG. There are also social and governance factors to consider. Social factors are issues relating to the relationship between companies and people, such as their employees, suppliers, customers, and communities. Examples of social issues of interest to investors include health and safety, labour standards, supply chain management and consumer protection. Governance factors are issues relating to the governance of an organisation, also referred to as corporate governance. Examples include board composition, executive remuneration, internal controls and balancing the interests of all stakeholders.
There are a variety of ways responsible investing can be applied and here are the five core industry recognised approaches:
HOW DO WE MAKE RESPONSIBLE INVESTMENT EASIER FOR YOU?
Your adviser will take the time to understand your feelings about responsible investment and its importance to you.
We fi nd most people fall into one of three categories:
In order to make it easy for you to understand how your investments are managed, each of the solutions on our investment panel has ESG ratings provided by Square Mile.
Square Mile is an independent investment research and consulting business which uses in-depth, qualitative fund research to analyse and rate how an investment manager incorporates ESG considerations into their activity at two levels:
At a company level – they seek to understand if and how an asset manager integrates the consideration of ESG factors in itsinvestment processes
At a fund level – they seek to understand if and how ESG factors are considered in the management of individual funds.
The ratings provided by Square Mile work in the following way:
1. ESG AWARE
If you are an ‘ESG Aware‘ investor, then your adviser will make recommendations from our investment panel and inform you of the
ESG ratings of each of the investment solutions they recommend.
2. ESG FOCUSED
If you are an ‘ESG Focused‘ investor, then your adviser will work with you to understand your ESG requirements. When selecting
solutions from our investment panel they will use the ESG ratings to help refine the recommendations they make in order to meet your requirements.
3. ESG DEDICATED
If you are an `ESG Dedicated’ investor, your adviser will work with you to understand how you want the management of your
portfolio to reflect ESG factors.
There are of course, lots of factors to consider and your adviser will help you to decide which options are right for you. Once they
have understood your preferences, they will then look at the dedicated ESG solutions available to you on our investment panel. In the unlikely case that they can’t meet your specific needs and preferences, they have the option of searching the wider market for you.
A SERVICE DESIGNED WITH YOU IN MIND
We believe our approach to responsible investment provides you with the perfect blend of insight, choice and value. Whether responsible investment is fundamentally important to you, or you’re simply curious, our service has been designed with you in mind. Your adviser will be able to provide you with all the information and advice you need to make a truly informed decision.
The value of investments can fall as well as rise. You may get back less than you invested.