More of us want to make responsible choices

From climate change to human rights, awareness of environmental, social and governance (ESG) issues is growing.

That’s why many of us are making more responsible and sustainable choices in our lives – from the products we buy, the food we eat, the energy we use, to what we do with our waste, and how we travel.

There are now also a range of options available for people who want to invest in a way that’s more responsible.

Responsible investment is becoming increasingly important

There’s a world of opportunity for your employees to invest in ways that consider the ESG issues that affect us all, our communities and the planet. Responsible investment also complements traditional financial analysis and fund choices.

Globe

What do we mean by responsible investment?

This is when investment managers use one, or a combination of different approaches to:

  • decide what to invest in
  • analyse ESG risks and opportunities a company may face, to help better manage risk and to help generate sustainable long-term returns (although remember that the value of all investments can go down as well as up)
  • offer funds aiming to achieve specific ethical, environmental or social goals
  • use their role as a steward of investments to encourage better ESG conduct and behaviours

You can find out more about these different approaches below. We also explain how responsible investment is applied to, and included in the investment options we offer.

The different responsible investment approaches

The United Nations-backed Principles for Responsible Investment (the PRI) defines the different approaches investment managers use to invest responsibly. It talks about these approaches in two broad categories: ESG incorporation and stewardship.

Below is a summary of these approaches, as outlined by the PRI, but using our own words to help explain each one. You can find more detail using the links below the visual.

Responsible investment – incorporating ESG issues into investments

ESG incorporation

Investment managers can use a combination of three broad approaches to include ESG in both their overarching investment processes and in the design of their individual funds.

Stewardship

As steward of an investment, an investment manager can influence positive change. They do this using engagement and voting rights.

ESG integration

A process used to analyse a company's approach to ESG to help spot opportunitites and manage risks. This doesn't include screening. So investments which could be seen as negative may still be included.

Screening

Funds that are screened and filters applied to rule investments in or out, based on objectives, preferences, values or ethics.

Thematic

Funds aiming to achieve a financial return alongside a specific environmental or social outcome.

Active engagement

Regularly talking to companies they invest in to understand their ESG activities and risks, and to encourage better conduct in these areas.

Proxy voting

Using voting rights on behalf of investors to encourage good management of matters such as governance, tax practices and climate change.

Can be applied across all actively managed funds Includes ethical funds Includes impact funds

Find out more about these approaches

Acorn

How ESG is integrated into investment choices

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Presentation

How we monitor ESG integration and keep you updated

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Scales

How ESG can help manage risk

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Certificate

The positive role of stewardship

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Discussion

Funds your employees can choose that use screening and thematic approaches

Find out more

Our approach is based on the PRI and the UK Stewardship Code.