environmental social and governance

ESG Funds: Understanding the What and Why

havenifa

havenifa


Posted on: 3rd December 2020

2020 has been a year where we at Haven IFA have taken the opportunity in overhauling our investment approach with a drive to expand our market view as well as standardise the investment approach for all of our clients, especially where environmental social and governance is concerned.

This has provided us with a clear focus on giving clients a clearer outlook including creating a preferred list of funds based on risk-based profiles.

Whilst ESG factors are not a sole focus and funds are neither included or excluded solely on their ESG views, Haven IFA do provide ESG funds throughout our preferred lists for a number of reasons;

●        Market-beating performance

●        Understandable and experienced fund management

●        Their underlying themes

What Exactly is ESG?

ESG is an acronym for Environmental, Social, and Governance which is generally linked with Sustainable investing. It is an umbrella term for investing that seeks returns that are positive and has long term effects on the performance of the business as well as society and the environment.

It sets out to showcase how companies are operating around their social responsibilities worldwide alongside their financial responsibilities to shareholders. 

It is not something new, in fact, sustainable investing has been around for decades and aims to impact many areas including social equality, health and wellbeing, climate change, and cyclical economies. However, only in recent years, it has been bounced around the mainstream to counter the misconceived notion that investing sustainably provides poorer returns.

Why Is It Suddenly so Popular?

Whenever you turn on the TV or read the news you actively see the world around us is changing, and within that investor’s attitudes are changing along with the improving availability of data.

Over the last 24 months, the world has witnessed an explosion of both national and international issues (Increased felling of the Amazon Rainforest, data protection in the EU, Greta Thunberg Extinction Rebellion and the Climate Change protests, wildfires in Australia and the US…) all whilst the millennial generation has grown up and begin to invest and wanting a clear identification on where their money is being invested, and what impact their investments are having on these issues on the scale of positive or negative.

Mike Fox, Head of Sustainable Investing at Royal London, recently commented that only 3% of the total AUM in the UK is held in sustainable strategies, so it still has a long road ahead.

Where We Stand

At Haven IFA We believe that this is not something destined to vanish in short order. ESG issues and their solutions are a long-term outlook and we believe the returns generated by ESG-focussed funds will continue to be strong as the world transitions into its sustainable operations. We don’t focus on single country markets or a single sector in our fund selection, we strategise so our clients will continue to gain benefits from improvements in ESG markets such as clean energy, technological improvements and cleaner mobility via mature funds, provided by experienced fund partners that are trusted and transparent. This reinforces our stance to provide clients with high levels of trust and ease as the best independent financial advisors UK.

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