The Future of Sustainable & Ethical Investing

The shift toward sustainable and ethical investing is increasingly being adopted across the country, with ESG now being a consideration of most investment plans. Ethical investing has evolved beyond socially responsible investing, to now consider environmental and corporate governance as well (ESG). By proactively directing capital towards impactful investments, combined with a strategic approach, we can generate a real return for the beneficiary while investing both ethically and sustainably.

Whether it’s Environmental, Social and Governance (ESG); Impact Investing; Ethical Investment; Socially Responsible Investing (SRI); Sustainable Development Goals (SDGs); Principles for Responsible Investment (PRIs) or any other term you may have heard of when considering how and where your money is invested, they all have one thing in common. That is, investing in such a way as to make a positive difference… ‘sustainably invest’…….writes Paul Hoyle, Chartered Financial Planner at True Bearing Chartered Financial Planners.

Supporting a evidence of a shift towards ethical investing, there have been numerous surveys conducted over the last few years by governments, media and investment companies. These have consistent results showing that between 60 to 70% ( retail’ investors, people like you and me, are wanting to know more about:

  • Where their money is invested
  • How is it currently being used
  • Is it used to do good or avoid harm
  •  Is it in a place that can still increase in value and make money, whilst making a positive contribution to a sustainable future?

Why these questions about ethical and sustainable investing?

Sustainable investment feels like the buzz word at the moment. It is a reaction to the climate change we have seen and heard of these past few years. We are now hearing quotes like “The moment of crisis has come” 

Most people will have heard of Sir David Attenborough. He is the world’s most-loved naturalist and arguably the most high profile campaigner for climate change.  More recently Greta Thunberg, the Swedish Environmental Activist, has campaigned for change. Whilst the work of these two ‘giants’ cannot be overemphasized, it is from two other participants that the most positive impact on reversing climate change could potentially come. Namely, financial advisers and you, their clients.

But, how can we positively impact climate change, like Sir David or Greta, through sustainable, ethical investing?

As mentioned above, survey after survey confirm the same thing. A large proportion of investment clients are interested in making a difference to the planet right now. They want to play their part in helping future generations immediately. These investors don’t want to wait around and see what happens.

These clients want to know more about how their investments can be used to do good and avoid harm. Yet still make money! However, they feel this option has not been presented to them to consider and discuss in the past.

Financial Advisers are without doubt, better placed than anyone to discuss these new solutions and ethical investing opportunities with their clients. They also have the means to perform suitable research to find appropriate, sustainable solutions.

However, not all financial advisers are on the same page as their clients. Many are not listening to what their clients are asking for. They are not aligning themselves with public opinion and not discussing available and/or appropriate sustainable investing options and solutions with their clients.

A recent study by Fidelity Charitable in 2018 found that whilst 41% of financial advisers have discussed Impact / Ethical Investing with their clients, only 20% admitted they were familiar with this area or viewed it as a long-term investing trend. So almost 60% appear to have no intention of offering this investment option to their clients for their consideration, preferring to stick with more ‘traditional solutions’. Surely this is a short-sighted approach that is highly likely lead to unsuitable outcomes and regulatory intervention?

What should a client expect of their financial adviser when it comes to ethical investing?

Quite simply, clients should expect advisers to be listening to their concerns. Their advisers should be proactively discussing ethical and sustainable investing options with them. They should also have a good level of understanding on how this type of investing may help meet their needs and objectives. If their financial adviser is not interested or doesn’t feel comfortable in discussing this potential opportunity, then clients should seek out a financial adviser that can help them.

The future of ethical and sustainable investing

This is an area that is growing at an exponential rate. It’s likely to increase further as it becomes a major part of financial planning in the next few years. Recent figures for sustainable investing* have indicated that there were $30.7 trillion of sustainably invested assets under management at the start of 2018. This is a 34% increase over the previous 2 years. This trend is expected to rocket over the next 5-10 years. We are likely to see a seismic shift from traditional investing, to those that make a positive difference……a sustainable difference.

We are already seeing signs that discussing sustainable investing with clients is likely to become a mandatory part of the financial planning process through regulation. The FCA** is currently consulting on this. Additionally, the European Securities and Markets Authority (ESMA) have already submitted their final technical advice to the European Commission (EC) with their proposed changes to Mifid 2 legislation. It’s now only a matter of time!

At True Bearing, we have a passion for advising in the field of ethical, ESG’s, sustainable and impact investing and we are well versed in helping clients discover and where appropriate, invest in this area. In the end, it’s in the name of The Planet that these forms of investing are here to stay.


To speak to someone at True Bearing Chartered Financial Planners please complete our enquiry form or call 01257 260011.

*Global Sustainable Investment Review 2018

**Climate Change and Green Finance: summary of responses and next steps Feedback to DP18/8