At a glance

  • Sustainability has gone mainstream and people increasingly expect businesses to behave in responsible ways.
  • But many don’t understand the role that responsible investing can play in creating a world worth living in.
  • They might also think that doing good by investing responsibly comes at a financial cost.
  • The fact, though, is that responsible investments can potentially help to drive better long-term returns.

At a glance

  • Sustainability has gone mainstream and people increasingly expect businesses to behave in responsible ways.
  • But many don’t understand the role that responsible investing can play in creating a world worth living in.
  • They might also think that doing good by investing responsibly comes at a financial cost.
  • The fact, though, is that responsible investments can potentially help to drive better long-term returns.

At a glance

  • Sustainability has gone mainstream and people increasingly expect businesses to behave in responsible ways.
  • But many don’t understand the role that responsible investing can play in creating a world worth living in.
  • They might also think that doing good by investing responsibly comes at a financial cost.
  • The fact, though, is that responsible investments can potentially help to drive better long-term returns.

When it comes to tackling the challenges of sustainability, a large majority of people feel a clear sense of personal responsibility. Indeed, 78% feel it’s important to play their role in protecting the environment, according to an in-depth study by The Wisdom Council.1

The research also shows that some 81% believe businesses should be as environmentally and socially responsible as possible, and that many consumers are delegating a chunk of the responsibility for driving change to companies – whether by buying local, avoiding firms that treat their employees badly, or advocating for those that strive to reduce their carbon footprint.

Yet, despite this welcome groundswell of support for the sustainability agenda, plenty of people don’t appreciate the role financial services – and in particular, responsible investing – can play in helping create a world worth living in.

And even if they do, they might not recognise that investing in a an ethical and sustainable way doesn’t have to come with a performance cost. In other words, the perception that you have to sacrifice financial gain and incur outsized investment risk in order to bask in the warm and fuzzy glow of knowing you’re ‘doing the right thing’ just doesn’t ring true.

In fact, there’s a growing link between businesses that do well and those that do good. In a February 2021 ‘Sustainable Investing’ report by Raconteur, global asset manager Ninety One revealed they’d noted a correlation between companies’ environmental, social and governance (ESG) ratings and how they’ve fared through the pandemic.

With that in mind, here are the answers to some common questions about responsible investing – including whether it can deliver a healthy return on your money.

What is ‘responsible’ investing?

This is where investors establish certain ethical criteria to guide their investment strategy. Factors that are often high on the agenda include environmental concerns, human rights and the way employees are treated.

I’ve heard the term ‘ESG’ used in this context – what does it mean?

It refers to ‘environmental, social and governance’. These are the three main ways of judging the sustainability and societal impact of an organisation, and are factors that investment experts pay close attention to when deciding to pursue a responsible investment strategy.

Is there a difference between ‘ethical’ investing and ‘responsible’/‘ESG’ investing?

‘Ethical’ investing is the term that was generally in use a few years ago, and has a slightly different meaning to ‘responsible’ or ‘ESG’ investing, which are more common now. ‘Ethical’ investing was mainly about investors simply refusing to buy stocks in companies that didn’t comply with set standards. Whereas ‘ESG’ is more about institutional investors engaging with corporations – in which they may hold a large stake – to ensure they ‘do well by doing good’.

So, to cut to the chase… does responsible investing work?

In terms of bringing about a change in most organisations’ behaviour… definitely. Almost all businesses are now ensuring they align to global ethical standards – or moving rapidly in this direction – as they know they will be held to account if they don’t.

“What moves the needle is shareholders engaging and working with companies on sustainability issues,” says Robert Gardner, Director of Investment Management at St. James’s Place. He gives the example of Ørsted, a Danish renewable-energy business. “It’s ranked as one of the most sustainable energy companies in the world and is the global leader in offshore wind power, but was actually once an oil and gas company.”

What’s more, such a transformation can lead to greater success for a business and its stakeholders. “Engagement not only has a positive impact on the planet and society, but it also has the potential to drive better long-term investment returns for our clients,” he says.

Will I get a better return on my money if I follow a ‘responsible’ investment strategy then?

That’s impossible to say for sure, as all investments can go down as well as up. However, recent analysis shows that ESG investing can deliver good returns in the long run. For example, research by financial data firm Morningstar has shown that, in the 10 years to 2019, 58.8% of surviving sustainable funds, from across seven different categories, out-performed their peer group.2

OK, so tell me how to invest money in a responsible way…

Broadly, you should be looking to use your savings and investments to support businesses that look after their people, their communities and the planet. And there are plenty of options for doing this.

You could, for example, take the time to properly evaluate companies’ ESG credentials yourself and invest in those that align most closely with your personal beliefs.

Or, if you don’t have the necessary time or knowledge, you can incorporate your values into your investments by putting money into funds that consider a broad range of ESG factors as part of the investment process.

Today, many asset managers are deeply committed to responsible investing – and engaging with companies to drive positive change. For example, all of St. James’s Place’s external fund managers are signed up to the United Nations-backed Principles for Responsible Investment.

Concludes Gardner: “Most people want to do the right thing and are starting to realise what an important role their savings have in building a better world, they just don't know how to do it. We provide the peace of mind that not only are they doing what’s right for them and their family, but also the world around them.”

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

When it comes to tackling the challenges of sustainability, a large majority of people feel a clear sense of personal responsibility. Indeed, 78% feel it’s important to play their role in protecting the environment, according to an in-depth study by The Wisdom Council.1

The research also shows that some 81% believe businesses should be as environmentally and socially responsible as possible, and that many consumers are delegating a chunk of the responsibility for driving change to companies – whether by buying local, avoiding firms that treat their employees badly, or advocating for those that strive to reduce their carbon footprint.

Yet, despite this welcome groundswell of support for the sustainability agenda, plenty of people don’t appreciate the role financial services – and in particular, responsible investing – can play in helping create a world worth living in.

And even if they do, they might not recognise that investing in a an ethical and sustainable way doesn’t have to come with a performance cost. In other words, the perception that you have to sacrifice financial gain and incur outsized investment risk in order to bask in the warm and fuzzy glow of knowing you’re ‘doing the right thing’ just doesn’t ring true.

In fact, there’s a growing link between businesses that do well and those that do good. In a February 2021 ‘Sustainable Investing’ report by Raconteur, global asset manager Ninety One revealed they’d noted a correlation between companies’ environmental, social and governance (ESG) ratings and how they’ve fared through the pandemic.

With that in mind, here are the answers to some common questions about responsible investing – including whether it can deliver a healthy return on your money.

What is ‘responsible’ investing?

This is where investors establish certain ethical criteria to guide their investment strategy. Factors that are often high on the agenda include environmental concerns, human rights and the way employees are treated.

I’ve heard the term ‘ESG’ used in this context – what does it mean?

It refers to ‘environmental, social and governance’. These are the three main ways of judging the sustainability and societal impact of an organisation, and are factors that investment experts pay close attention to when deciding to pursue a responsible investment strategy.

Is there a difference between ‘ethical’ investing and ‘responsible’/‘ESG’ investing?

‘Ethical’ investing is the term that was generally in use a few years ago, and has a slightly different meaning to ‘responsible’ or ‘ESG’ investing, which are more common now. ‘Ethical’ investing was mainly about investors simply refusing to buy stocks in companies that didn’t comply with set standards. Whereas ‘ESG’ is more about institutional investors engaging with corporations – in which they may hold a large stake – to ensure they ‘do well by doing good’.

So, to cut to the chase… does responsible investing work?

In terms of bringing about a change in most organisations’ behaviour… definitely. Almost all businesses are now ensuring they align to global ethical standards – or moving rapidly in this direction – as they know they will be held to account if they don’t.

“What moves the needle is shareholders engaging and working with companies on sustainability issues,” says Robert Gardner, Director of Investment Management at St. James’s Place. He gives the example of Ørsted, a Danish renewable-energy business. “It’s ranked as one of the most sustainable energy companies in the world and is the global leader in offshore wind power, but was actually once an oil and gas company.”

What’s more, such a transformation can lead to greater success for a business and its stakeholders. “Engagement not only has a positive impact on the planet and society, but it also has the potential to drive better long-term investment returns for our clients,” he says.

Will I get a better return on my money if I follow a ‘responsible’ investment strategy then?

That’s impossible to say for sure, as all investments can go down as well as up. However, recent analysis shows that ESG investing can deliver good returns in the long run. For example, research by financial data firm Morningstar has shown that, in the 10 years to 2019, 58.8% of surviving sustainable funds, from across seven different categories, out-performed their peer group.2

OK, so tell me how to invest money in a responsible way…

Broadly, you should be looking to use your savings and investments to support businesses that look after their people, their communities and the planet. And there are plenty of options for doing this.

You could, for example, take the time to properly evaluate companies’ ESG credentials yourself and invest in those that align most closely with your personal beliefs.

Or, if you don’t have the necessary time or knowledge, you can incorporate your values into your investments by putting money into funds that consider a broad range of ESG factors as part of the investment process.

Today, many asset managers are deeply committed to responsible investing – and engaging with companies to drive positive change. For example, all of St. James’s Place’s external fund managers are signed up to the United Nations-backed Principles for Responsible Investment.

Concludes Gardner: “Most people want to do the right thing and are starting to realise what an important role their savings have in building a better world, they just don't know how to do it. We provide the peace of mind that not only are they doing what’s right for them and their family, but also the world around them.”

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

When it comes to tackling the challenges of sustainability, a large majority of people feel a clear sense of personal responsibility. Indeed, 78% feel it’s important to play their role in protecting the environment, according to an in-depth study by The Wisdom Council.1

The research also shows that some 81% believe businesses should be as environmentally and socially responsible as possible, and that many consumers are delegating a chunk of the responsibility for driving change to companies – whether by buying local, avoiding firms that treat their employees badly, or advocating for those that strive to reduce their carbon footprint.

Yet, despite this welcome groundswell of support for the sustainability agenda, plenty of people don’t appreciate the role financial services – and in particular, responsible investing – can play in helping create a world worth living in.

And even if they do, they might not recognise that investing in a an ethical and sustainable way doesn’t have to come with a performance cost. In other words, the perception that you have to sacrifice financial gain and incur outsized investment risk in order to bask in the warm and fuzzy glow of knowing you’re ‘doing the right thing’ just doesn’t ring true.

In fact, there’s a growing link between businesses that do well and those that do good. In a February 2021 ‘Sustainable Investing’ report by Raconteur, global asset manager Ninety One revealed they’d noted a correlation between companies’ environmental, social and governance (ESG) ratings and how they’ve fared through the pandemic.

With that in mind, here are the answers to some common questions about responsible investing – including whether it can deliver a healthy return on your money.

What is ‘responsible’ investing?

This is where investors establish certain ethical criteria to guide their investment strategy. Factors that are often high on the agenda include environmental concerns, human rights and the way employees are treated.

I’ve heard the term ‘ESG’ used in this context – what does it mean?

It refers to ‘environmental, social and governance’. These are the three main ways of judging the sustainability and societal impact of an organisation, and are factors that investment experts pay close attention to when deciding to pursue a responsible investment strategy.

Is there a difference between ‘ethical’ investing and ‘responsible’/‘ESG’ investing?

‘Ethical’ investing is the term that was generally in use a few years ago, and has a slightly different meaning to ‘responsible’ or ‘ESG’ investing, which are more common now. ‘Ethical’ investing was mainly about investors simply refusing to buy stocks in companies that didn’t comply with set standards. Whereas ‘ESG’ is more about institutional investors engaging with corporations – in which they may hold a large stake – to ensure they ‘do well by doing good’.

So, to cut to the chase… does responsible investing work?

In terms of bringing about a change in most organisations’ behaviour… definitely. Almost all businesses are now ensuring they align to global ethical standards – or moving rapidly in this direction – as they know they will be held to account if they don’t.

“What moves the needle is shareholders engaging and working with companies on sustainability issues,” says Robert Gardner, Director of Investment Management at St. James’s Place. He gives the example of Ørsted, a Danish renewable-energy business. “It’s ranked as one of the most sustainable energy companies in the world and is the global leader in offshore wind power, but was actually once an oil and gas company.”

What’s more, such a transformation can lead to greater success for a business and its stakeholders. “Engagement not only has a positive impact on the planet and society, but it also has the potential to drive better long-term investment returns for our clients,” he says.

Will I get a better return on my money if I follow a ‘responsible’ investment strategy then?

That’s impossible to say for sure, as all investments can go down as well as up. However, recent analysis shows that ESG investing can deliver good returns in the long run. For example, research by financial data firm Morningstar has shown that, in the 10 years to 2019, 58.8% of surviving sustainable funds, from across seven different categories, out-performed their peer group.2

OK, so tell me how to invest money in a responsible way…

Broadly, you should be looking to use your savings and investments to support businesses that look after their people, their communities and the planet. And there are plenty of options for doing this.

You could, for example, take the time to properly evaluate companies’ ESG credentials yourself and invest in those that align most closely with your personal beliefs.

Or, if you don’t have the necessary time or knowledge, you can incorporate your values into your investments by putting money into funds that consider a broad range of ESG factors as part of the investment process.

Today, many asset managers are deeply committed to responsible investing – and engaging with companies to drive positive change. For example, all of St. James’s Place’s external fund managers are signed up to the United Nations-backed Principles for Responsible Investment.

Concludes Gardner: “Most people want to do the right thing and are starting to realise what an important role their savings have in building a better world, they just don't know how to do it. We provide the peace of mind that not only are they doing what’s right for them and their family, but also the world around them.”

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

References

1. The Wisdom Council, ‘Consumers are acting more sustainably – just not with their savings’. Based on a Nationally Representative Online Survey with 2000+ UK consumers, February 2021

2. Morningstar, ‘How Does European Sustainable Funds’ Performance Measure Up?’, June 2020

References

1. The Wisdom Council, ‘Consumers are acting more sustainably – just not with their savings’. Based on a Nationally Representative Online Survey with 2000+ UK consumers, February 2021

2. Morningstar, ‘How Does European Sustainable Funds’ Performance Measure Up?’, June 2020

References

1. The Wisdom Council, ‘Consumers are acting more sustainably – just not with their savings’. Based on a Nationally Representative Online Survey with 2000+ UK consumers, February 2021

2. Morningstar, ‘How Does European Sustainable Funds’ Performance Measure Up?’, June 2020

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