EdenTree

Investing responsibly & sustainably: can’t see the wood for the trees?

By Ketan Patel, manager of the EdenTree Responsible & Sustainable UK Equity Fund

Investing responsibly & sustainably: can’t see the wood for the trees?
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The level of interest within the UK in responsible and sustainable investing has been unprecedented in recent years. This strong momentum has rightly led to greater scrutiny over the authenticity of many asset managers’ approach to environmental, social and governance (ESG) factors.

In addition, lack of standardisation remains a key issue for consumers, who are faced with a variety of labels — including ethical, SRI, responsible, sustainable, ESG, impact and transition, to name just a few.

The choice of an appropriate asset manager has therefore never been more vital for willing responsible and sustainable investors, who are faced with this bewildering choice of funds, all of which appear to have the right credentials. So what should investors look for in their fund manager to give them comfort that their capital is being invested in line with their values and principles?

Choosing an investment manager with a specialist offering built around ESG that has been developed through long-term experience in the field is most important. Lack of credibility in the market is an issue, with investment houses of all sizes currently rushing to market with new or repurposed products, while claiming to be experts in the field. However the commitment of specialist houses can be evidenced by the presence of a long tenured in-house ESG team which is effectively integrated into the investment process.

Looking for examples of how the asset manager engages and conducts proxy voting on issues is also an excellent way of evidencing how companies are held to account via your fund manager. The majority of asset managers publish proxy voting records on a quarterly basis, and these should be easy to find online. However, specialist houses with a focus on ESG will seek to engage and influence companies across a myriad of issues.

The presence of clear thought-leadership is another important indicator to look for, as this is an area where an asset manager can demonstrate leadership over the long term. ESG themes and concerns change over time, and having a fund manager that can articulate what these issues are and how they affect investors, then form a cogent strategy to respond to them, will help to ensure that your values don’t become misaligned with your portfolio in an ever-changing landscape.

EdenTree’s approach fully integrates environmental, social and governance factors in every part of our investment process, and we place a large emphasis on our own in-house research. We brought one of the first ethical UK equity funds to market more than 30 years ago, meaning investors benefit from a combination of our deep expertise in responsible and sustainable investing within the UK, as well as our holistic approach to ESG.

As investors seek to avoid the greenwash which is becoming more and more evident in ESG, choosing the right fund manager remains one of the best ways to navigate what is becoming a highly contested field. There are plenty of asset managers jumping on the bandwagon, but the specialist investment houses such as EdenTree are the ones that have the experience and skill-set to deliver in the long term.

edentreeim.com/uk-equities

The views contained herein are not to be taken as advice or recommendation to buy or sell any investment or interest. The value of an investment and the income from it can fall as well as rise, you may not get back the amount originally invested. Past performance should not be seen as a guide to future performance. EdenTree is authorised and regulated by the Financial Conduct Authority and is a member of the Investment Association. Firm Reference Number 527473.