The ever increasing importance of Ethical, Social and Governance policies for businesses
Companies’ good Environmental, Social and Governance policies, ESG, are more important than ever today. This is because increasing numbers of investors, especially Millennials, expect the companies they invest in to be true advocates of ESG rather than simply paying lip service to it.
The concept of ethical and environmental investing has been increasing in significance ever since the sixties around the time the fund management industry started to expand into widespread use. Of course responsible investing has been around since the 18th century when the Quakers and the Methodists created clear guidelines to followers over the types of companies in which they should invest, as did a range of other religious groups.
Increased regulation and pressure from the Millennial generation since the global financial crisis of 2008 has reinforced the involvement of companies with the society in which they operate and the duties they have to all stakeholders.
In 2006 The Principles for Responsible Investment, PRI, was created by a joint initiative between the former UN Secretary-General Kofi Annan, 20 investor groups and 70 experts from the investment industry, intergovernmental organisations and the civil society. The underlying concept of the PRI is that environmental, social and governance issues can influence the performance of investment portfolios. Taking ESG issues into account and applying them to investment decisions contributes to the sustainability of the financial system.
The PRI’s areas of work are mainly organised around ESG issues. Signatories to the six principles are subject to annual assessments of ESG reports submitted by them including annual questionnaires. The PRI also offers a number of useful resources for investors.
My fund management company Minerva Money Management became a paid up signatory to PRI a couple of years ago. They follow the following six PRI principles;
Principle 1: They will incorporate ESG issues into investment analysis and decision-making processes.
Principle 2: They will be active owners and incorporate ESG issues into their ownership policies and practices.
Principle 3: They will seek appropriate disclosure on ESG issues by the entities in which they invest.
Principle 4: They will promote acceptance and implementation of the Principles within the investment industry.
Principle 5: They will work together to enhance our effectiveness in implementing the Principles.
Principle 6: TheyWe will each report on their activities and progress towards implementing the Principles.
So the above principles are weaved into the investment process for our fund, the CCM Intelligent Wealth Fund.
Minerva Money Management are firmly opposed to unethical and non-environmental companies who trade in areas such as nicotine, alcohol, drugs, arms, fossil fuels, gambling, pornography, deforestation, unfair labour practices and so on.
Today there is estimated to be £19 billion invested in ethical funds in the UK alone. Globally the figure is more like $80 billion. The trend towards investing in businesses that are ESG friendly is set to continue and with good reason. The sustainability of the planet is increasing in importance with every passing year.
Minerva Money Management is proud to be a fee paying signatory of PRI and we will continue to be so indefinitely. So if you are interested in investing in a fund which is a signatory to Principles for Responsible Investment why not invest in the CCM Intelligent Wealth Fund?* You know it makes sense.
*The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs’ practice. Levels and bases of tax relief are subject to change.