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Ethical Pensions and Investments

Many of us already make choices in our lives to be more ethical, sustainable and green.  From recycling to using less energy to walking instead of driving.

However, many of us are missing out on the biggest impact we can have on the world – through our investments and pensions.  Most peoples pensions and investments and invested in a wide range of companies, including some of the biggest oil, gas, arms, tobacco and banking.

But you can take back control of your pensions and investments and make them work for a better world.

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What is Ethical Investing?

The value of an investment is no longer about how much money it can make you – but also about the positive impact it can have on the planet and society.  And that’s where ethical investing comes in.

Ethical Investing is a catch all term for a range of different types of investing which can all have a positive impact on the world.  Whilst there is no widely accepted definition of ethical investing, it basically involves setting your investment strategy to focus on ethical goals as well as a monetary return.

Under the broad term “ethical investment” there are more focused types which include:

  • Environmental / Green
  • Sustainable
  • Environmental, Social and Governance (ESG)
  • Responsible
  • Corporate Social Responsibility (CSR)
  • Blue Investing

Now that Auto Enrolment and NEST pensions have been introduced, the chances are we are all investing in some way or another through our pensions, and you may be surprised to find out what your money is supporting.  Most default pension funds tend to invest significantly in Oil, Mining, Banking and Arms companies, which means if you want to invest ethically, to support companies that align with your values, you have to make an active choice, .

Ethical Investing is no longer a niche activity and can help you align your investments and your pension pot with your values and help drive change for better in the world.

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Can I Invest Ethically?

The short answer is, yes you can!  The good news is that everyone is able to get involved in ethical investment and start unlocking the benefits for the world and society, whether this be through your pension pot or your investment portfolio.

Investing ethically has become more mainstream recently and including ethical investing into your investment strategy could be easier, and a lot more beneficial, than you think with many pension pots also allowing ethical investment with your funds.  If you have a pension plan it is likely you are already investing in a range of companies, which may not all align with your values.

Not only is it joining the mainstream in terms of ease of access and availability, but it could boost your investment returns whilst helping to align your investments with your personal outlook and morals.  It is likely to be easier than you think, and with huge potential impacts on the world, its something every investor should consider.

You’ve made the important first step in ethical investing – trying to find out more!

If you have any further questions or would like to speak to an ethical financial advisor then please get in touch with us and we’ll be happy to help.

What can we do to help?

We are  Independent Financial Advisers and we offer financial advice on a range or areas including pensions, investments and financial planning.

We want to give everyone the opportunity to invest ethically, whether it is a small part or all of their funds.  We don’t restrict ourselves to ethical investments or pensions (as we believe that everyone should be free to have their owns views) but offer the option of learning more about ethical investing and to give the opportunity to weave in your ethical views into our advice process.

Please get in touch to see how we can help you understand and benefit from ethical and sustainable investment.

what to save for retirement by 55

Help find the right ethical shares and funds

There are a large range of ethical companies and funds out there which cover a wide range of areas, from green technology development to fair-trade farming, and the criteria to judge if they meet the right standards can vary considerably.

We can help you understand which ones align with your views whilst also fitting with your investment goals and help you choose from the 1,000’s of options to picks the right ones for your portfolio.

Review your current arrangements

We can help you review you current and investment arrangement to see not only how ethical they are, but also if they are arranged in the right way.  A review can help you save costs, optimise and consolidate your investments and help you understand the strengths and weakness of your current portfolio.

Boost Your Performance

Ethical investment doesn’t mean giving up on making your money grow.   Ethical investing is still investing, and keeping you money growing and protected is still a main priority.

We believe that companies who prioritise sustainable energy sources, who build strong relationships with their employees, customers, suppliers and the communities in which they operate, and whose leadership teams operate with integrity, will ultimately deliver better investment returns over time that those who do not.

So now you can do your bit for the future while also giving your money a chance to grow.

Save You Money

When it comes to making your money grow, costs are often overlooked when it comes to maximising your returns, but a focus on reducing costs as part of your investment plan can be a big help in boosting long-term growth. 

This is even more crucial when it comes to ethical investing.  As you move away from more mainstream products and into more niche areas there is an increased risk of higher costs.  For example funds that have to filter their stock selection (and so increase their research, due diligence etc) are likely to have a higher costs base which means a higher charge for operating the fund.  This is in contrast to a simple tracker where the selection is easier (e.g. buy an equal amount of all FTSE 100 companies).

An experienced advisor can help work out the most cost effective way of arranging your pensions and investments and also help to understand the cost that choosing to invest ethically might incur.

How To Invest Ethically

Ways to get in touch with an adviser

Fill out our contact form and an adviser will call you back at a time that is convenient to you

Give us a ring for a Free no obligation discussion on how we may be able to help you: 01173 823 823

Drop us a line with any query you may have and we'll make sure we get back to you as quick as we can: contact@leafifa.co.uk

How do we do it?

Free Consultation

We offer a free initial consultation where we can discuss your situation, what type of advice you might need, and how much it might cost.

This can be face-to-face, over skype or the phone and at a time that is convenient to you.

Face to face Advice

We believe face to face advice is the best way to not only fully understand a clients situation but it also help deliver better advice. 

Many of our appointments are in our clients homes where you can feel comfortable to discuss your situation without any pressure.  This is of course optional.

Flexible Appointments

We strongly embrace flexible working and see many our our clients in the evenings and weekends.  We firmly believe that no client should have to take time off work to come and speak to an adviser!

Benefits of ethical investing?

Whether Sustainable, Responsible, Green or Blue, there are clear benefits to ethical investing:

  • Sustainable Returns
  • Live in Alignment with your values
  • De-risk your portfolio
  • Avoid stranded investments
  • change the corporate world for the better
  • Help the planet

Does ethical investment mean lower returns?

Many make the assumption that choosing to invest in Ethical investments means a trade off – more ethical means lower returns.  This view is understandable, choosing to select investments by filtering for any requirement is going to limit choices, and the more choices are limited the likilhood of you being able to chose the bets investments from a performance perspective diminish.  And for many this is acceptable, the reduction in monetary income is literally a price worth paying for a more ethical portfolio.__ many of us in our loves 

ESG: return on investment
Evaluating ESG criteria may be a way of enhancing traditional financial analysis, not replacing it. The aim isn’t solely to form sure that investment is ethical; the most objective of ESG, as with any investment, is financial performance.  The logic here is that companies who care about the environment, society and good governance should perform better within the long-term than companies who don’t prioritise those things – making responsible organisations a far better investment all-round. Of course, like any investment, the worth of ESG funds could always go down also as up and you’ll revisit but you put in.

Can I use my Pension Pot to invest ethically

Using your pension can be a great way to have an instant impact with ethical investing.  The money in your pension pot is likely already invested in a range of companies across the world, and there’s a good chance that you do not agree with the ethical or moral stance of many of the companies you are unwittingly investing in (as much of the UK FTSE100 is made up of banking, fossil fuel, mining, tobacco or arms).

Even if your current pension provider offers an “ethical fund” it is likely only a choice between 1.  Out of the thousands of ethical funds and investments in the world it is quite unlikely that this default one selected by your pension provider (for all it’s pension customers) is the best for you.  What is defined as “ethical” by your pension provider might not align with your own views. 

The good news is that there are a ***range of pensin provisders???  solutions???

Please note that not all types of pensions have the required pot of investments inside them.  Defined Benefit (Final Salary) type pensions do not, although there still options for using pension savings to invest in an ethical manner.  If you have a defined benefit pension and you would like to discuss your situation and how you can invest ethically then please get in touch for a chat about your situation.

Find out more aboutthe different types of Ethical Investing

More details on the difference between Ethical, Green, Blue, ESG and CSR Investing.

As already mentioned ethical investing is a catch all term for a broad type of investment.  Within this ** the different type explained:

Ethical or socially responsible investing is when you strategically invest in companies that have ethical practices.
Of course, ‘ethical’ is a subjective term. For example, an ethical fund manager could define tobacco and gambling as unethical, yet consider alcohol to be acceptable. Typically though, ethical funds tend to avoid investing in companies involved in weapons manufacture, alcohol, tobacco, gambling or fossil fuels; while favouring renewable energy companies, sustainable technologies or healthcare. We go into more depth on what makes an investment ‘ethical’ here.

Find out more about what Blue Investing is

What is Blue Investing?

  •  – Similar to green investing but with a focus on the marine environment

Investing in an Ethical or Green manner is no longer as niche or difficult as it used to be.  We believe that not only has it joined the mainstream in terms of access but it could even boost your investment returns whilst helping you align your investments with your personal outlook/morals.  It is something every investor should consider.

Helping everyday investors invest ethically was the cornerstone of our founding principles.  In fact it strongly  influenced the name – Leaf (green, growing and “turn over a new leaf”- trying something new).  We are Bristol based Financial Advisers who can help you understand and benefit from ethical and sustainable investment.

Frequently Asked Questions on Ethical Investment

We answer some of our most commonly asked questions about Ethical Investing below.  But if you would like to know more then please get in touch and we will be happy to answer any query you may have.

In most cases, yes you can use use your pension to invest ethically. Most pension pots have within them a set of investments, usually a combination of shares and bonds. When you pay money into your pension each month this cash is used to purchase shares (for example) with the aim of these investments growing over time. These investments are your pension and they belong to you.

 

Green pensions are pensions that help to address climate change by investing pension pot assets in companies that try to make a positive impact on the environment or excluding those that have a negative impact.  An example would be investing in a company that build wind turbines, but excluding companies that extract fossil fuels.

As with all investing there is risk and the returns are uncertain, but there is the added benefit that you now that your pension is supporting the global environment with long-term sustainable investment.

In most cases, yes you can use use your pension to invest ethically. Most pension pots have within them a set of investments, usually a combination of shares and bonds. When you pay money into your pension each month this cash is used to purchase shares (for example) with the aim of these investments growing over time. These investments are your pension and they belong to you.

 

Environmental, Social and Governance (ESG) – a focus on ESG companies that demonstrate behaviours in terms of their environmental impact, social responsibility and the quality of their internal governance.

Similar to green investing but with a focus on the marine environment

Ways to get in touch with an adviser

Fill out our contact form and an adviser will call you back at a time that is convenient to you

Give us a ring for a Free no obligation discussion on how we may be able to help you: 01173 823 823

Drop us a line with any query you may have and we'll make sure we get back to you as quick as we can: contact@leafifa.co.uk

What does ethical investment advice involve?

Ethical investment advice is a type of general investment advice which involves weaving in your personal views on ethical investing to make sure your investments are aligned to your view and beliefs.

It will likely involve the same types of assets that you would nirmally have in your portfolio

to make sure your investment portfolio reflexcts the amount of ethical focus that ** align with

As many pensions have at their core a set ofg investments, its likely that your own pensino can be *** refocused

Ethical investment advice is a type of general investment advice which involves weaving in your personal views on *** to make sure your investment portfolio reflexcts the amount of ethical focus that ** align with

As many pensions have at their core a set ofg investments, its likely that your own pensino can be *** refocused

Where to invest Ethically

No matter how you define “ethical investing” (e.g. focusing more on the environment/green issues or wider “anti-sin”) we can help you.

Investing could be within an ISA, SIPP, bonds, passive or active funds or many other ways.  We don’t view Ethical Investing as separate from mainstream investing, but rather one of the components of a professionally developed financial plan.

A professional adviser can help you either review your current investments to align them towards your ethical investment choices.

“Ethical investing is giving yourself the power to use your lifetime assets and wealth to influence the direction of the future based on your own personal/individual beliefs.”

Andy Rogers – Founder, Leaf Financial

What is ESG Investment ?

Environment, social and governance (ESG) investing means an investor will take environmental, social, and governance criteria into account when they’re considering which assets to invest in.  This is one approach to investing your money sustainably.

So, if an investor was considering investing in a particular company’s shares , they’d assess areas such as the organisation’s environmental ***, just like the business’ energy consumption, their policy on global climate change , or their waste production.
They’d check out social factors, just like the company’s community engagement, how well they
protect human rights, or employee relations.
And they’d check out the company’s governance – the way the business is run – like the
quality of management, diversity of the board, or conflicts of interest.

Click here to find out more about ESG investing na dhow it compares to other ethical investments

ESG investing vs other ethical investments

Unlike ESG, some responsible investments
are focused on specific sustainable outcomes.
For example, some ethical investments attempt to
exclude so-called sin stocks, like investments
in tobacco, oil, or gambling. ESG, meanwhile,
goes one step further. rather than focussing on
excluding the bad, it positively includes the
good.
Rather than simply removing all sin-stocks,
an ESG approach seeks to incorporate assets
that score highly on those all-important
environment, social and governance factors.
So you’ll be assured that your money is
being put into companies that are
actively identified as doing good.

From a financial point of view,
ethical investments may prioritise
social responsibility over profits
and are sometimes criticised
for the problem that presents
in building a very diverse
investment portfolio.
ESG instead puts potential returns
on investment and responsible
investment on more equal terms.
With all investments, it’s worth
speaking to your financial adviser
first to form sure it’s the proper
choice for you.

What is CSR Investing?

CSR Stands for Corporate Social responsibililty

How to decide if something a ethical/sustainable or not?

It can sometimes be hard to draw the line for what is ethical, sustainable or green and what is not.

As an example is a company called Ørsted, a Danish renewable energy company with a vision to “create a wold that runs directly on green energy”.   Ørsted claims to be one of the biggest green energy companies in the world and has installed one third of all offshore wind turbines globally, which makes it an important part of the drive to a zero-carbon world.

However, Ørsted still produces a small part of it’s energy through coal and, due to contractual obligations, it will be unable to fully phase out coal until 2023.  So although it’s overall impact on the environment can be seen to be overwhelmingly positive and in theory a good investment for someone who wants to support the move to renewable energy, there is the dilemma that the investment is still in a fossil fuel burning company.

This distinction becomes even more relevant when you consider the different ways of screening stocks.  A method of removing all fossil fuel burning companies from contention would remove Ørsted, despite it’s positive contribution to the move to reduce reliance on fossil fuels.  As you can see it’s not always straightforward to judge what is ethical (or green etc) and some opportunities present a real dilemma for ethical investors.

There is also a balance between deciding to 

x

x

x

xEthical or socially responsible investing is when you strategically invest in companies that have ethical practices. Of course, ‘ethical’ is a subjective term. For example, an ethical fund manager could define tobacco and gambling as unethical, yet consider alcohol to be acceptable.  Typically though, ethical funds tend to avoid investing in companies involved in weapons manufacture, alcohol, tobacco, gambling or fossil fuels; while favouring renewable energy companies, sustainable technologies or healthcare.  We go into more depth on what makes an investment ‘ethical’ here.

Fill out our contact form and an adviser will call you back.

Give us a ring for a Free no obligation discussion on how we may be able to help you: 01173 823 823

Drop us a line with any query you may have and we'll make sure we get back to you as quick as we can: contact@leafifa.co.uk