April 22nd marks Earth Day, the anniversary of the birth of the modern environmental movement. The theme of Earth Day 2023 is ‘Invest in our Planet’ - so naturally it caught our attention. As a firm of Independent Financial Advisers, ‘investing’ is core to our business. But did you know that you can invest in a sustainable future? 

Environmental, Social and Governance, or ESG, is now the widely accepted term for what was previously known as 'ethical', 'green', 'sustainable' and 'socially responsible' investing. 

ESG in a nutshell 

What’s included? Well, environmental criteria consider the impact a company’s activities have on our planet, including policies addressing climate change. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. These ESG criteria provide companies with a measurable, actionable, and accountable path to sustainability.  

Sustainable financial returns 

As environmental awareness becomes increasingly widespread and more urgent, many clients turn to us to ensure their financial returns are sustainable – and that their money reflects their values. In fact, 52% of people consider sustainability factors when selecting an investment product. 61% of people believe that individual investors can significantly contribute to a more sustainable world by choosing sustainable investment products. (Personal Finance Society’s Good Practice Guide May 2021) 

The impact of this? Roughly 89 percent of investors considered ESG issues in some form as part of their investment approach in 2022, up from 84 percent in 2021, according to a Capital Group study. 

Here at Simpson Financial Services, we offer dedicated ESG portfolios as an option to all our clients. With this type of investment philosophy, your money is invested in companies who are thoroughly screened to ensure they’re acting in the best interests of planet Earth. As well as supporting these companies, ESG investing naturally demands a wider change in corporate practices. 

But what about the cost?  

There’s a common misconception that costs are higher and returns are worse for ESG portfolios vs. non-ESG – but there is little clear evidence to substantiate this. You want your investment to deliver a return, whilst also promoting ethical corporate responsibility, and it’s true that these two aims can sometimes butt heads. Choosing the right investments for this can be tricky, and so talking to an experienced Independent Financial Adviser who understands your objectives and your values is key. 

Interested in ESG investing? 

As we reach the 53rd anniversary of Earth Day, it’s imperative that we each look at the impact our individual actions have on our planet. If you’re interested in finding out more about ESG investing, get in touch with us today.  

Please note, the value of investments can go down as well as up and you may get back less than the amount invested.