THE BUSINESS WISHLIST IS NOW BECOMING A REALITY

Publication Date14 May 2021
Publication titleBusiness Insider
"The significant increase we have seen in customers opting for our ethical investment plans over the past year has meant that their uptake is now outstripping our standard investment plans by almost two to one.

"What's more, investment returns on our ethical plans last year actually outperformed our original investments, demonstrating the added value of consuming, purchasing or investing ethically."

This is a key factor in the rise of ethical investments: improving returns on the investment. Ewing at Brewin Dolphin says: "It is often thought that ethical funds receive lower returns than their not-soethical counterparts. But, as more people align their investment choices with their own values, these funds are generally competing and on a positive trajectory of growth.

"ESG (Environmental, Social and Governance) reporting requires businesses to disclose their performance across environmental, social and corporate governance measures and allows fund managers to understand investment risk and the impact these may have on longterm returns.

"Companies are screened by funds based on their ESG performance to determine whether they should sit within a portfolio, so it is increasingly valuable for businesses to accurately measure their stakeholder and ESG impact."

Jan Gruter, a legal director at law firm Addleshaw Goddard, part of the firm's wealth and asset management team, says that ESG factors are becoming more and more prominent.

He said: "Certainly, on the investment funds side, we're seeing a lot more focus on environmental, social and corporate governance reporting (ESG). This focus is not just from the regulators, but also from investors, with institutional investors now often asking for

particularly detailed reporting as well as the associated data. We are also starting to see fund manager's rewards, such as carried interest, being linked to sophisticated ESG metrics and impact indicators.

"It is becoming increasingly challenging for fund and asset managers to keep up with

developing ESG regulations and voluntary standards on the one hand and very bespoke investor requirements on the other.

"The associated challenge is gathering the data on which to report. This presents a particular challenge for fund managers investing in private companies, with data not as readily available as that from public companies."

Jill Arnold, the head of SIS Ventures, describes herself on her LinkedIn profile as someone who is passionate about "delivering commercial outcomes whilst building harmony and consensus".

She says: "It's very clear that responsible investing criteria absolutely can play a very decisive role in investment decisions and is doing so already."

She highlights an EY report from last year that showed 91 per cent of investors they surveyed said non-financial performance really played a pivotal role in their investment decision making over the past 12 months.

"That in itself is really the business case for responsible investing going forward. It's still a relatively small segment of the market, but we do

know that...

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