Hugh Lambert No Comments

I read an article during the week about a fund manager who had sold out one of the company holdings in it’s funds as they felt they weren’t doing enough to reduce carbon emissions.

And that’s becoming quite prevalent, and has become quite prevalent, over the past several years where companies and investors are increasingly looking at the ethical considerations when they’re making investment decisions.

So for anybody who is wondering about ethical investment and what it means:

Investment fund managers will go through their normal investment criteria in terms of considering the financials, economic aspect of things, and then they’ll apply what’s called ESG, when looking at companies.

ESG stands for environmental, social and governance aspects of the company.

So from an Environmental point of view and they (pension/investment fund managers) look at the company, they look at their carbon emissions. They look at their pollution levels and how they’re trying to curtail those or reduce those.

They look at the Social aspect, which is how they deal with their workers. It’s the workers, rights, their conditions, the health and safety track records. Also data protection, which relates to worker and customers.

The last part then is Governance. Fund Managers look at the Board of directors. They look at the diversity of the Board of Directors, any sort of track record in terms of bribery or corruption. And they also look at the level of pay of the Board of directors.

So they’re just extra criteria that are applied to investment decisions.

It’s something I think it’s going to gather a lot of momentum for future investors. Aviva life and Pensions did a survey recently and they found that 70% of pension investors thought ethical considerations were important part of the investment process.

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