ESG comes into its own

ESG – environmental, social and governance – considerations are playing an ever-increasing role in investment decisions. What used to be classed as ethical investment, socially responsible investment (SRI) and green investment have now to some extent merged under the ESG banner. The table below gives a taste of the broad range of ESG investment considerations.

Table that shows a broad range of ESG investment considerations

In 2020, the popularity of ESG funds among the UK investing public grew dramatically, perhaps at least in part a response to the pandemic. The Investment Association’s (IA) ‘Responsible Investments’ category saw net retail sales more than treble to £10bn, almost a third of all 2020 sales and equal to the 2019 total for net retail sales. The IA 2020 statistics also show that over the year the value of funds in the category increased by two thirds, to £45.7 billion.

The latest figures from the IA show that were ESG funds to be classed as a fund sector, they would represent the eighth largest of the IA’s 38 fund sectors. However, they are not a unique sector as there are ESG funds to be found covering nearly all investment areas.

Across these areas ESG funds also take different routes to implementing the ESG approach. It is common for fund managers to rely on external ESG rating bodies, which do not always agree with each other. As is always the case with investing in funds, it is best to take advice on what is under the bonnet rather than relying on the marketing badge outside.

If you’d like more information around ESG investment, please get in touch.

The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Important information:

This document is marketing material. This document is provided by the author and may not necessarily represent views expressed in other Aspect8 communications, strategies or funds. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall. The sectors, securities, regions and countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Aspect8 does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Aspect8 has to its customers under any regulatory system. Regions/sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. This content is issued by Aspect8 Limited, Holmwood House, Broadlands Business Campus, Langhurstwood Road, Horsham, West Sussex, RH12 4QP. Registered No. 07572431. Authorised and regulated by the Financial Conduct Authority, FCA no. 227247.