Investing sustainably

Sustainability means different things to different people, so we feel it’s important to clearly define what sustainability means to us when it comes to investing.

Sustainable investing is not an either/or approach, with philanthropy on one end of the spectrum and traditional investing on the other. Successful, sustainable investing comprises a twofold desire for both creating positive impact, combined with the desire for financial return. This kind of investing asks, how can we invest to maximise financial return while considering the impact of the companies we invest in at the same time?

The simple answer is to invest more in companies that demonstrate best practice within their industries (such as the move towards renewable energy), while investing less or totally excluding those with less sustainable practices or harmful products. Sustainable investing consciously attempts to meet the needs of today, without compromising future generations' ability to meet their needs.

Increasingly, investors wish to align their investments with their personal values, tastes, and preferences. Many make the false assumption that this cannot be achieved without lowering financial returns. The best evidence suggests that between conventional and sustainable approaches, there is no significant difference in long-term returns.

Past approaches to sustainable investing have led investors to wholly exclude any companies that fail to meet certain criteria. While this may achieve the desired outcome from a values point of view, siloed and exclusionary approaches have often meant many portfolios fail to diversify properly, leading to large fluctuations in performance.

Our approach to sustainability complements our Investment Philosophy, rather than superseding or replacing it. We believe a well-constructed portfolio can reflect your personal values, tastes and preferences whilst delivering a diversified, low cost and evidence-based solution to help meet your goals.

Impact investing is an emerging sector which has captured much attention and grown rapidly throughout Europe and the US. The idea takes the concept of sustainable investing even further, suggesting a greater focus on measurable positive impact, generally in asset classes such as private equity, private debt, and direct real estate.  

Given the specificity required in impact investing, it generally isn't feasible to integrate the approach into a broad investment strategy, since investment opportunities must be looked at by specialists on a case-by-case, deal-by-deal basis. Investors need to tread carefully in this new and developing area. Naturally, we are excited and curious about anything which aims to make our world better, while providing financial returns. If impact investing is of particular interest to you, or you require more information, please contact us.