This article is from our Good Guide to Financial Wellbeing for Women, which is free to download here
Financial jargon can be hard to keep track of at the best of times – and just when you think you’ve gotten a handle on the latest money mutterings; they change all over again.
But whether it’s termed green, ethical, ESG (environmental, social & governance) or sustainable investing, the aim is generally the same: it’s making money while making the world a better place, and it’s clear this is a fast-growing market.
Historically, ethical investing focused on excluding specific companies and sectors – like tobacco or arms. Today though, most strategies have evolved to include companies that have best in class ESG scores in a particular sector. Impact investing, meanwhile, goes a step further by investing in companies whose products and services generate social and environmental impact as well as financial returns.
Sustainable investing that suits you
At EQ Investors (EQ), we offer a wide range of sustainable investment options across the green investment universe which can be tailored to suit your goals.
With a ten-year track record, the EQ Positive Impact Portfolios are mapped against the United Nations’ Sustainable Development Goals and designed to address the biggest challenges faced by humanity.
Our EQ Future Leaders Portfolios combine the growing preference for socially responsible portfolios with the increasing popularity of low-cost passive funds. The core of these portfolios invests in businesses that are strong performers when measured on ESG criteria. They also invest in sustainable sectors, such as clean energy, healthcare, and green bonds.
Launched in early 2022, the EQ Climate Action Portfolios allow you to align your financial goals with the global effort to reduce climate change risks and reach net zero. They invest in companies on a credible science-based path to net zero, companies ahead of the curb in carbon efficiency and those whose products and services provide solutions to decarbonisation.
Going forward, investment portfolios will need to continuously decarbonise to tackle global climate change and low emissions portfolios are better prepared for climate change transition risk, so we measure the carbon footprint for all our portfolios.
Aiming for attractive returns
But no investment is included based on its environmental or social credentials alone – it must also aim to deliver an attractive return for investors. Demand is being driven by this combination and an increasing number of people who prefer to invest in alignment with personal values.
Many studies from heavy-hitting financial institutions including Morgan Stanley have shown that green investment can boost returns while reducing risk. This makes sense when you consider this approach favours companies that are actively trying to do good and run their businesses in a sustainable way.
Such companies avoid fines and other penalties and have stronger relationships with their customers, suppliers, and employees. Moreover, they tend to operate in new sectors with high growth potential. In short, these are the green companies of the future, and those we want to be invested in.
Suitable for ISAs and personal pensions, we’ll provide all the investment advice you need, so you can just sit back and check your performance online, anytime.