Making a difference with your investments

Sustainability is about more than
just environmental impacts

Along with considering the environmental
impact a company’s operations have,
sustainable investing also incorporates a
company’s societal impact and how it is
governed.

A company that has a detrimental impact
on its environment is more likely to have an
unsustainable business model. The same goes
for one that has a negative impact on society,
or that has poor governance practices.

Assessing a company’s sustainability can
help align investments to an investor’s set of
values. In addition, it can help drive positive
change by signaling to companies what areas
stakeholders see as important, and where
certain issues may need to be addressed.

Furthermore, it’s important for investors
to be aware that a company with an
unsustainable business model presents
additional risks over the long-term.

One of the most common ways of
incorporating sustainability into an
investment process is via the integration
of environmental, social and governance
factors. This is termed ‘ESG’ investing.

ESG investing is more than simply screening
and excluding companies engaged in
certain business areas, such as gambling,
fossil fuels or tobacco. It includes a range
of non-financial measures to help identify
sustainable and non-sustainable businesses,
and those taking active steps to improve the
sustainability of their businesses.

Socially responsible investing is
here to stay

Socially responsible investing has gained in prominence in recent years and is anticipated to become increasingly important in the years ahead. COVID-19 has acted as a further boost, with more and more investors recognising the importance of thinking about the bigger picture, rather than only pursuing returns.

Gone are the days where the only focus
for a company was on maximising
shareholder value – a company must now
be aware of the impacts of its activities
on all stakeholders, be they shareholders,
customers, employees, suppliers, or society at
large. Companies must maintain their social
license to operate, and controversies have
real effects on company valuations.

Sustainability scores

To help clients invest sustainably, we have developed sustainability scores. These scores provide valuable information for socially responsible investors, weighing up the key issues and highlighting issues for investors to consider in an easy to understand manner.

As an example, when considering a company’s emissions, we look at how emissions intensive a company’s activities are, what they are doing to lower their footprint, if they have measurable reduction targets in place, and whether the company is aware of the risks and opportunities climate change may bring.