The rise of ethical investing

Over the years, ethical investing has seen a steady growth in popularity as more and more investors begin to favour socially responsible companies.

According to the Investment Association, last year 26% of the UK’s assets under management were invested through a socially responsible strategy. That equates to just over a quarter of the UK’s assets under management.

This is evident through the changing attitudes of investors. More people are beginning to form strong views on ethical topics such as climate change. Over the last year alone, the likes of Extinction Rebellion and Greta Thunberg have dominated the headlines. And let’s not forget the ‘Attenborough effect’- the noticeable uplift in awareness and engagement around plastic reduction and biodiversity protection arising from the BBC series ‘Blue Planet’.

Many people appear to be viewing social and environmental issues with a higher degree of importance and this includes investment attitudes.

Historically, ethical investment focused on areas of the market which people did not want to support, such as tobacco or alcohol. However, the landscape for responsible investing is evolving and there are more options than ever for investors with a responsible focus.

As opposed to excluding specific companies and industries, it is becoming increasingly common for fund managers to invest with an ESG focus. This entails looking at environmental, social and governance factors during the investment analysis process. This approach offers a less restrictive proposition. However, it still allows investors to actively seek to make a positive impact on society and the environment.

Although many ethical funds continue to levy exclusions, there is a wider acceptance that certain industries are vital to the world economy. What better way to encourage positive change than to impose influence through shareholding?

Taking an ethical approach certainly comes with its own complexities. At Birkett Long IFA, we can offer guidance and support to ensure your investments align with your own views and values.

If you would like to discuss ethical investing in greater detail, or would like advice on your financial arrangements as a whole, please contact me on 01206 217329 or trey.vella@birkettlong.co.uk.