Tatler Experts' Corner: I hear a lot about sustainable investing but what are people actually doing in practice?
17 June 2021
As part of the Tatler SOS Experts' Corner, we delve into the subject of investing sustainably and ethically. Here, Catherine Grum from BDO gives the lowdown on how sustainable investment actually works and different ways in which to approach it.
It’s fair to say that there has been a lot of rhetoric around sustainable investing over recent years – broadly referring to any investment approach that targets not only financial returns but also positive environmental and/or social goals and good governance. Many are however sceptical about the degree to which all the talk has been matched by concrete action.
Certainly there are a number of obstacles in the path that have deterred would-be private investors from otherwise pursuing a sustainable investment strategy; the confusion caused by the use of multiple overlapping terms such as ethical investing, impact investing, and socially responsible investing; challenges of tracking and measure the degree to which a particular investment actually achieves its non-financial objectives; and questions about the potential impact a sustainable investment approach might have on an investor’s overall financial returns.
However, when you look past the labels and some of the more recent marketing blurb at the actual principles that lie behind sustainable investing, many investors have been doing this for years. Historically the easiest approach was to exclude certain investments or even whole industries because of their activities were not in alignment with the investor’s values – such as tobacco companies or businesses linked to the South African apartheid regime.
There were also those who sought out opportunities based on their positive impact, for example the Lever family (the family behind Unilever) were investing in companies on social grounds nearly half a century ago.
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