The UK has always been a leader in sustainable investing, with the concept of ethical investments and ESG investing (Environment, Social and Governance) becoming increasingly popular. But what does it actually mean to invest ethically? What options are available for investors looking to explore this type of investment strategy?
An ethical investment is one which allows investors to ensure their investment capital is used to invest in companies or sectors which they believe display good behaviours and values, and that promote a positive impact on society or the environment. There are various ways of investing ethically, including green funds, which focus on renewable energy or environmentally friendly companies, impact funds which focus on social or community issues, and ESG funds, which take into account not just environmental but social and governance factors.
There are various types of ethical investments available in the UK. One of the most popular is green funds, which invest in companies or sectors that promote sustainability, such as renewable energy, energy efficiency or green tech. These funds tend to offer lower returns but they can help investors support the cause that the green fund targets, such as reducing carbon emissions or combatting climate change.
Impact funds are another form of ethical investment which focus on social or environmental issues. These funds may invest in companies or sectors which are tackling poverty, aiding in economic development in poorer nations, or providing education and healthcare in developing countries.
The third type of ethical investment is ESG funds which are gaining in popularity in the UK. ESG stands for Environmental, Social and Governance and these funds take into account factors such as a company’s overall governance structure, its policies on social issues, and its impacts on the environment. This type of fund looks to invest in businesses which are taking steps to reduce their negative environmental impacts, are developing good social responsibility strategies, or have a sound corporate governance structure.
The UK offers a range of options for investors looking to explore ESG investing. For example, the Responsible Investment Association, a not-for-profit organisation, supports sustainable investing across the UK. It offers a range of options and products, including green funds, impact funds, and ESG funds.
There are also a number of companies that specialise in ethical investment options. For example, Impax Asset Management offers a range of options for ethical investors, from green funds to sustainable portfolios and ESG funds. It is committed to ensure positive environmental and social impact with its investments.
The recent rise in ethical investments is also leading to more options on the high street. Increasingly, banks and other financial institutions are offering ESG products, such as sustainable bond funds, green funds and ESG-related investment trusts.
In the UK, it is now easier than ever for investors to make a positive contribution to society and the environment whilst achieving their financial goals. By investing ethically and considering a range of ESG investments, investors can ensure they are getting a return and they are investing in something which is making a difference.
Whether investors are interested in green funds, impact funds or ESG funds, there is now more choice and variety than ever before for ethical investing in the UK. It is now easier than ever for investors to make a positive difference and pursue their financial goals whilst investing in something they believe in.