ESG Investing – Will 2021 Be the Year of Green?

Sustainable investing has moved on from the traditional ‘ethical’ model. This method screened out companies operating in areas such as arms dealing, tobacco, or gambling. However, ethical views are subjective, and funds of this type tended to be treated as the exception rather than as a mainstream investment option. Ethical funds were often more expensive than their standard counterparts, offered limited investment choices, and could not realistically align with the views of every investor.

20th May 2021

ESG investing has taken this model and evolved, resulting in a variety of investment options to suit most investors.

What is ESG Investing?
ESG stands for Environmental, Social and Governance. These describe some of the factors that may be taken into account by fund managers when deciding whether to invest in a company.

ESG investing takes a more positive and inclusive approach to stock selection. Funds with an ESG mandate aim to invest mainly in companies which have a positive effect on society.

The companies selected will have strong credentials in one or more of the following areas:




A company may score highly in several of these areas, but fall down in others. The objective is not to invest according to strict criteria, but to seek out companies which have an overall positive impact.

Equally important is the investment potential of these companies. ESG investing does not unconditionally screen out companies with one or two red flags. Instead, the fund manager will weigh up the positive with the negative, and select companies with strong growth or income prospects. Investors can also use their voting rights to influence company policy.

Why Now?
There are a number of reasons why ESG investing has taken off in recent years, and is set to keep up the momentum in 2021:

As awareness of ESG investing increases, so does the demand. This leads to wider availability, and more acceptance of this investment style into the mainstream.

Reasons to Consider Sustainable Investing
You may wish to consider adopting an ESG approach to your portfolio for any of the following reasons:

Investment Options
If you would like to invest sustainably, there are a number of options available:

ESG investing has now moved firmly into the mainstream, and could be a worthwhile choice for your investment portfolio.

Please don’t hesitate to contact a member of the team to find out more about sustainable investment planning.

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