Ethical Investing
Invest in your future - according to your values
Your investments can do more than help you build wealth for the future. They can also reflect the things that matter to you.
Ethical investing allows you to consider the environmental, social and governance impact of where your money is invested, alongside traditional investment factors such as risk, return and diversification.
At Culverhouse & Co, our Chartered Financial Advisers can help you understand your ethical investment options and build an investment strategy that aims to balance your financial objectives with the causes and values you care about.
Speak to us about your ethical investing journey
What is Ethical Investing?
Ethical investing is an approach to investing that considers how a company or investment behaves and what it contributes to society and the environment, alongside its financial prospects.
Different investors have different ideas about what constitutes an ethical investment.
For one person, avoiding companies involved in fossil fuels may be important. Another investor may want to support renewable energy, healthcare or social housing. Others may prioritise companies with strong employee policies, responsible supply chains or good corporate governance.
There is therefore no single definition of an ethical investment. The right approach depends on what matters to you.
What does ethical investing mean in practice?
Ethical investment funds and portfolios can use different approaches when selecting investments.
Negative screening: Negative screening excludes companies or industries that do not meet certain ethical criteria. This could include businesses involved in areas such as:
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Tobacco
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Weapons
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Gambling
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Fossil fuels
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Intensive animal testing
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Certain environmental practices
The exclusions used will depend on the particular investment fund or strategy.
Positive screening: Positive screening looks for companies that are considered to have a positive environmental or social impact. This could include businesses involved in:
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Renewable energy
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Clean technology
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Healthcare
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Education
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Sustainable infrastructure
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Social development
ESG investing: ESG stands for Environmental, Social and Governance. ESG factors can be considered alongside traditional financial analysis when assessing an investment. Environmental factors might include a company's carbon emissions or use of natural resources. Social factors can include employee treatment, human rights and relationships with communities. Governance can include areas such as company leadership, board structure, transparency and shareholder rights.
It's important to remember that ESG investing and ethical investing are not necessarily the same thing. ESG is a broad framework for assessing companies, while ethical investing is generally more closely connected to an investor's personal values and ethical preferences.
Can ethical investing still provide financial returns?
Choosing investments based on ethical or sustainability criteria does not mean that you have to abandon your financial objectives.
Your investments still need to be assessed in terms of factors such as:
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Your overall financial circumstances
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Potential returns
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Investment risk
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Diversification
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Time horizon
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Liquidity
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Charges
Ethical investing should therefore be considered as part of a properly diversified investment strategy, rather than simply choosing investments because they appear to have a positive social or environmental impact.
There are risks with investing, and the value of investments can fall as well as rise. You may get back less than you invest.
Is ethical investing right for me?
Ethical investing may be worth considering if you want your investments to reflect your personal values.
You may want to think about ethical investing if you:
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Want to avoid investing in particular industries
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Want your investments to reflect your personal beliefs and priorities
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Are concerned about the environmental impact of your investments
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Want to support businesses addressing environmental or social issues
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Want to understand where your pension or investment money is being invested
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Are building a long-term investment portfolio and want ethical considerations to form part of the process
However, ethical investing is not simply about deciding what you do and don't want to invest in.
Your financial objectives still need to come first.
What should I consider before choosing an ethical investment?
One of the biggest challenges with ethical investing is that different funds can use very different definitions of “ethical”.
Two funds might both describe themselves as ethical while having very different investment policies. Before investing, it can therefore be useful to understand the below:
What does the fund actually invest in? Look beyond the fund's name and marketing material. Check the investment approach and the types of companies or assets that can be included.
What does the fund exclude? If avoiding particular industries is important to you, check the fund's exclusion criteria carefully.
How does the fund measure its impact? Some investments focus on avoiding harmful activities, while others actively seek investments intended to create positive environmental or social outcomes. These are different approaches and may suit different investors.
What are the risks and charges? Ethical considerations should not mean ignoring the financial fundamentals. You should still understand the investment's level of risk, charges, potential returns and how it fits within your wider portfolio.
Ethical investing for your long-term financial goals
Ethical investing should form part of your wider financial plan rather than being considered in isolation.
For example, you may be investing for:
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Passing wealth to your family
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Financial independence
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A property purchase
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Long-term wealth
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Retirement
The investment strategy that is appropriate for you will depend on your objectives, timeframe, financial circumstances and attitude to risk.
We can help you consider your ethical preferences alongside these factors.
Ethical investing and your pension
Your pension may be one of the largest investments you have, yet many people don't know where their pension savings are invested.
If ethical investing is important to you, it may therefore be worth reviewing your pension arrangements.
Depending on your pension provider and scheme, you may have access to different investment options with varying ethical, ESG or sustainability criteria. However, changing pension investments should not be based solely on ethical preferences. Your pension also needs to support your retirement objectives, investment timeframe and attitude to risk.
Our Chartered Financial Advisers can help you review your pension and investment arrangements as part of your wider financial plan.
Ethical investing in Kent and South London
Culverhouse & Co provides ethical investing advice in Kent, South London, Surrey and East Sussex.
Our Chartered Financial Advisers work with clients across Orpington, Bromley, Sevenoaks, Swanley, Edenbridge, Tonbridge, Tunbridge Wells, Maidstone, Chelsfield, Locksbottom, Petts Wood, Dartford, Godstone, Sidcup and East Grinstead, as well as surrounding areas.
Whether you are building an investment portfolio, reviewing existing investments or want to understand how your pension is invested, we can help you explore your options and ensure your investment strategy reflects both your financial objectives and your personal values.
How Culverhouse & Co can assist with Ethical Investing
There is no one-size-fits-all ethical investment strategy.
Our Chartered Financial Planners and Advisers take the time to understand what matters to you, as well as your financial objectives. We can help you:
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Review your investments as your circumstances and priorities change
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Identify the environmental and social issues that matter to you
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Build an investment strategy around your financial objectives
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Understand the different approaches to ethical investing
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Understand how your investments are selected
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Review your existing investments and pensions
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Consider ethical and ESG investment options
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Assess investment risk and diversification
The aim is to help you invest with greater confidence while making sure your portfolio remains appropriate for your financial circumstances.
Invest according to your values
Your money can play an important role in your financial future, but you may also want to know that your investments reflect what matters to you.
At Culverhouse & Co, our Chartered Financial Planners and Advisers can help you understand your ethical investment options and create a strategy that considers your values, financial objectives, risk and long-term plans.
The value of investments can fall as well as rise, and you may get back less than you invest. Ethical investment approaches may restrict the available investment environment and can affect investment performance. Advice should be based on your individual circumstances. For financial advice, please consult a professional.
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