The Importance of Responsible Investing

Why is Responsible Investing Important?

The world is currently facing huge challenges such as climate change, inequality and extreme poverty. These challenges impact us all and we want to be part of the solution.

So why is Responsible Investment so important to us?

Lifestyle Financial Planning

We are first and foremost lifestyle financial planners which means we are working with clients to help them achieve and maintain their desired lifestyles. This involves making financial decisions that play out over the long-term; a savings strategy that lasts a whole working life, a retirement planning strategy that could last for thirty years or more or an estate planning strategy that involves passing wealth to the next generation in years to come. Part of any strategy is to invest and manage wealth over the long term but if we don’t tackle the challenges that are facing us, this could threaten the very lifestyle we want to lead or the legacy that we want to leave our children and grandchildren.

Positive Returns

We believe (and this is backed up by academic research) that it is possible to achieve positive financial returns and take into account Environmental, Social and Governance (ESG) responsibilities. We would go further and say that that those companies that don’t take into account their ESG responsibilities will underperform and will exhibit increased risk. For example, in the wake of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, BPs total compensation bill reportedly exceeded $65bn; following the financial crisis, Bank of America was fined $16.65bn in 2014 for its role in the subprime loan scandal; and in 2016 Volkswagen was facing a penalty of $14.7bn in penalties in the US in the wake of the scandal over emissions cheating. (source: Management Today 24/05/2019). These fines had a huge impact on the underlying share price of these companies.

Awareness

There is much more awareness of the challenges we face. There have been a whole host of documentaries highlighting the impact human behavior has had on climate change and the message has been spread by climate activists such as Greta Thunberg. Other activists have raised awareness of the impact of poverty including Marcus Rashford, the footballer and his campaign to end child food poverty.

Alignment of Values

More and more people are concerned as to where their wealth is invested and the impact their investment decisions are having on society and the environment. We are increasingly finding that clients want to align their values with the way they invest and want to make a positive difference.

If you want to learn more about our Responsible Investment approach, please do get in touch.