As the world picks through the agreements made at Cop26 and considers the next steps to halt climate change and biodiversity loss, many investors are now looking towards ethical investments as a way to play their part.
Most of us understand that fundamentally we need to change the way we live our lives to protect the planet for future generations. We recycle; we are more aware of the poor treatment of makers and employees; we know that our next vehicle will need to be a hybrid or electric, but can those small changes make the big difference that the planet needs? Or could we go further and begin considering how the money that we invest could also be harming the world.
In this week’s podcast, I look at the common myths about ethical investing that could stop you from deciding to choose a greener path for your money.
One of the biggest fallacies about ethical investments is that they don’t perform as well as more traditional investment routes. In my podcast, I bust this myth with internationally recognised facts and statistics. In fact, ESG funds (Ethical, Social, Governance) now make up a significant proportion of the best performing funds and, looking to the future, there is increased potential that they will perform better compared to traditional investments.
Another argument against making the ethical choice with your money is that ethical investments are higher risk. While this may have been the case in the past, the acceleration of consumer demand for ESG means that more responsible companies are beginning to embrace corporate social responsibility and ethical practices. This means that the market has opened up.
My podcast moves on to another well-used myth, “ethical investing can be more expensive”. While creating a personalised portfolio can cost more, when you compare an ethical portfolio with a traditional one, the ethical one will often work out cheaper. Listen in to hear me explain why.
A big concern for investors considering ethical options is ‘greenwashing’. Greenwashing is when a company portrays itself on the surface as having green credentials when, in fact, they haven’t made all that much of a difference. Forty-four percent of ethical investors listed greenwashing as a significant concern. This week I explain the strict standards that have been introduced to ensure that any money invested in ESG funds is used for good.
To listen to the full podcast and learn how ethical investing can make a positive difference, click here