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ESG & SRI Funds

We have ESG and SRI funds

When it comes to investing, you do have the option to invest in companies who want to align your money with your values. ESG investing is about putting your money into companies and funds with a strong ESG track record.

What is ESG?
Environmental, Social and Governance criteria (ESG), is a framework companies use to evaluate their sustainability. This is shared with the world by that business, giving people the ability to evaluate the sustainability of all businesses based on this framework.
Environmental factors look at the conservation of the natural world, social factors examine how a company treats people both inside and outside the company and governance factors consider how a company is run.

Here are some examples of what each ESG category covers:

This framework is applied to businesses and presented to you via shades of green. The greener an investment portfolio, the more confident you can be that you’re putting your money in companies who take the above seriously.

You may choose to not want to invest your money and in turn hopefully make money in companies who do not pay salaries that match the cost of living or adhere to labour laws.

Socially Responsible Investing (SRI)

SRI uses investment strategies to promote sustainable development for the good of society.

This can be achieved by any one of the following:

  • Negative screening – Finding companies that score poorly on the ESG framework relative to their peers and then avoiding these companies when constructing a portfolio.
  • Positive inclusion – Companies are included in a portfolio according to defined criteria, which could be the industry they operate in, such as renewable energy, or an alternative strategy could be how they score on ESG criteria.
  • Impact investing – by targeting specific companies or industries that produce social or environmental benefits.

What is the difference between ESG and SRI?

The main difference between ESG and SRI is intentionality, as ESG looks at the company’s environmental, social, and governance practices alongside more traditional financial measures, whereas, socially responsible investing involves choosing or disqualifying investments based on specific ethical criteria.

Choosing SRI over ESG means you are willing to sacrifice any future performance based on your values and ethical views. This looks like either choosing investments that align with your values or avoiding investments that don’t.

Is there any disadvantage to ESG and SRI investing?

There is no guarantee that by using an ESG or SRI fund, the performance would be higher than a portfolio which does not use ESG or SRI strategies, as you are limiting the number of companies in which you can invest.
An example of this is that you may underperform the broader markets if the industries you are excluding experience periods of strong performance, for instance, if you excluded energy stocks that use Fossil Fuels and they had a period of significant growth.
Important Information – The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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