The workshop

Socially responsible investing

Each edition, OT  poses a question from an AOP member. Here, we explain what you need to know about ethical investing


The scenario

Jyoti, AOP member

I run a chain of successful independent practices, and after a few years of healthy profits I’m looking to begin investing. Whilst I’d like to grow my business and this is one aim, I am also extremely environmentally and socially conscious. Could you provide some advice on sustainable investments, and where to start with this subject?

The advice

Daniel James, director of client services, Lloyd & Whyte

If you have reached a point where your practice is doing well and your profits are healthy, you may have been wondering how to invest in companies that ethically align to your values and goals.
Climate change, pollution and geopolitical conflict, along with sky-rocketing food and fuel prices, have resulted in people becoming increasingly aware of the fragility of the earth, and many want to act in a way that helps. Both seasoned investors and those just starting out are increasingly aware of the power of their pound coin, and are turning to socially-conscious and ethically-centred investment opportunities.

The rising popularity of ethical investing

Recent data shows that 68% of people in the UK would choose sustainable investments if they had the chance, with numbers rising to 70% for women, 74% for millennials, and 77% for people with over £25,000 of investable assets.

The latest Investment Association UK figures showed a continued rise in ethical investing, with responsible investment funds receiving a net retail inflow of £1.6 billion.

Practising ethical and socially responsible investing

These methods of investing link your ethics with your finances, and can potentially offset negative ways that your work impacts on the world, such as frequent use of plastics. One of the most powerful ways you can facilitate positive change is by offsetting your carbon footprint by investing in clean technology. This method of investing can help you to create positive change and stay true to your values, without compromising on return.

Socially Responsible Investing (SRI)

SRI looks at the broad picture of how and where you invest, rather than looking at avoiding or including certain business or business practices. It looks to achieve capital growth whilst supporting inclusive economic developments by investing in environmentally and socially responsible business practices. This means that in some cases certain business types will not be used within a portfolio, such as arms or certain petrochemical companies, but in other cases, proactive and forward-thinking companies who are looking to change and develop could be. Sustainable themes such as healthcare, social housing, education, the circular economy and renewable energy will all form the core of the investment.

In some instances, companies are invested in to help provide access to the investment boards so that shareholder activism can be used. This provides the shareholder the ability to influence corporate decision making, policies and behaviours which either improve the success of the company or steer management into making more ethical and socially conscious decisions.

Environmental, social and governance funds (ESG)

ESG tends to work on looking at what businesses are currently doing. Do they meet set criteria already and if so, can they be included within a portfolio? ESG takes a broad view on the investment opportunities and options available to you. It looks to deploy or invest in businesses that are already implementing good practices, and businesses that have future policies which are shaping their business model in a positive way, such as oil companies that are investing heavily in green energy in an attempt to move away from oil production more quickly. There will be a ‘buy’ or ‘avoid’ list, but funds will still look to work within similar areas and opportunities.

A first step towards sustainable investment

Lloyd & Whyte’s independent financial advisers are here to offer you expert advice on ethical investing. Lloyd & Whyte are proud to be part of the Benefact Group – a charity-owned family of financial services companies that give all available profits to charity and good causes. The Benefact Group is the fourth largest corporate donor in the UK.

If you would like to explore the ways that your money can make a difference, we’re here to help. Book a financial review on 01823 250750 or email [email protected]

Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain.