Having recently attended The Spectrum IFA Group Annual Conference, I discovered we are on the brink of a fundamental reshaping of finance.
We were given presentations from the various fund managers we work with. This year the message was the same from each one and very different from the usual theme. Refreshingly so!
There was less concern or discussion about Brexit, Trump and the Trade Wars. It was more focused on a much bigger concern, which is believed to stem from customer demand, connected to our environment. A concern now and very much for the future.
So how can fund management help the environment? Do they only select successful companies where there is the best potential for growth for their investors? Here we see a fundamental change to one where the sector for good potential for growth might now be ESG Investing. This stands for Environment/Social Governance Investing generally known as environmentally friendly investing or green investments.
As my colleague, Gareth, in Italy sums it up:
Certain fund managers are adapting to the challenges and know that if their sector fails to adapt then they will likely go out of business. Consumers are being selective about who they do business with and are making choices based on how company policy sits with their personal views. Equally, investment managers have realised this trend and are also aligning their asset management styles with those of their customers, because they can see that prospective investors will choose investments based on how they match with their ethical views.
Asset managers are the largest allocators of capital in the world: investment funds, pension funds, sovereign investment funds etc and now they are starting to look at not just where they place money, but question why they do it. This could be the catalyst for real change.
Consumers and employees are the real capital of any business. People are making choices based on how businesses treat their customers and also their employees. Happy employees make for higher profits and more prosperous businesses.
Let’s do things for the future not in the future. Creating wealth without borrowing from the future.
The Spectrum IFA Group is adapting to these changes and we are currently working on a selection of ESG investment portfolios. We are mindful that there is always the danger that this trend can attract what is known as “green washing” funds, i.e. not completely compliant with ESG requirements, so we have a careful selection process. A word of warning if you seek ESG type investments: avoid anything that sounds too good to be true, that merely has a trendy sounding name and don’t invest in anything that does not have a track record. Use professionals to guide you who have the resources and research behind them.
If you would like to know more about ESG investment funds, please contact me below: