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Clean up

Socially responsible investing is now part of the mainstream, and the strategy is starting to outperform core benchmarks. Tom Dines and Harriet Clarfelt look at the trends and how investors can tap into clean profits
Clean up

It wasn't long ago that the idea of ethical investment was anathema to most investors – a worthy exercise that delivered dull investment returns at best that only the wealthiest do-gooders could afford to absorb. But for most companies, corporate and social responsibility is no longer just a box-ticking exercise. A wave of regulation and growing customer awareness of social and environmental issues means ethics now have a genuine effect on the bottom line – and that means investors can no longer ignore how clean (or dirty) a company's profits are.   

That very real trend is manifesting itself in a major shift into socially responsible investment vehicles. According to the latest biennial trends report from the Global Sustainable Investment Alliance (GSIA), sustainable investment around the world grew by a quarter between 2014 and 2016 to $22.9 trillion (£17.4 trillion). Institutional investors are, unsurprisingly, leading the way, with many having proclaimed their commitment to responsible money management by becoming signatories to the United Nations Principles of Responsible Investment (UN PRI), and by incorporating the UN Sustainable Development Goals (SDGs) into their investment practices, which loosely speaking refer to the assimilation of environmental, social and governance (ESG) considerations into investment decisions.

 

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