deVere - committed to sustainable ESG investing
Nowadays, more and more people are looking to put their money into companies that encourage and promote sustainable practices and other important positive features. If it is important to you that your investments have a beneficial impact on the world around you, you’ve come to the right place.
Environmental, social and governance (ESG) issues are becoming increasingly important for all of us – and at deVere they are a major priority.
At the beginning of 2020, we were amongst the very first to identify ESG investing as this decade’s ultimate investment megatrend. We knew it would cut across all sectors, but we could not predict just how much and how quickly it would develop. We’re 100% committed and ready to meet the challenges and seize the opportunities ahead.
What does ESG mean?
Socially conscious investors are increasingly investing in companies which incorporate ESG criteria in their operation. But what does ESG mean for you as an investor? And what exactly does the acronym ‘ESG’ stand for?
The umbrella term covers three main factors. E is for the environment and includes issues such as climate change policies, carbon footprint, water usage and the use of renewable energies. S is for social and includes workers’ rights and protection, client satisfaction and workplace health and safety. G is for governance and includes diversity of the board, corporate transparency, company’s leadership, shareholder rights, compensation practices and internal control processes.
What is ESG based Investing?
ESG based investing is a form of socially responsible investing that emphasises not only a company’s financial returns and performance, but also its impact on its employees, its stakeholders, and the environment.
ESG is a progressively more common way for investors – particularly the younger generation such as millennials, who are statistically more likely to seek these kinds of sustainable and responsible investment options – to decide which companies they want to invest in.
Incorporating ESG investments into your financial portfolio is also a good way to ensure diversification.
This increase in ESG investing came about because of several reasons, including the heightened awareness of social, labour, and human rights issues over the past few years, as well as the growing awareness of environmental issues such as climate change.
During the economic turmoil and instability that came about due to the COVID-19 pandemic, the performance of many companies with a strong ESG track record tended to fare better than that of those companies which did not have ESG standards incorporated into their operations.
It is essential for companies and organisations to recognise and embrace the ESG revolution occurring in the investing world.
ESG due diligence
ESG provides an extra layer of due diligence in companies.
The Environmental aspect looks at how the company affects the planet. Factors can include energy use, waste management, pollution, natural resource conservation, promoting sustainable practices and supporting sustainability, climate change measures, greenhouse emissions, carbon footprint, and recycling practices.
The Social aspect looks at the company’s relationships with employees and stakeholders. Factors can include Social Responsibility (CSR), philanthropy, employees’ working conditions, health and safety and training, diversity, inclusion, human rights, customer satisfaction, and stakeholders’ interests being upheld.
The Governance aspect looks at whether the company is using accurate and transparent practices or not. Factors can include ethical business policies, board diversity and structure, board independence, compliance, tax strategy, corruption, and shareholder communications transparency.
ESG Investing trends
Investors are increasingly becoming more concerned about the sustainability of their investments and are shying away from companies which have negative impacts on the world around us, such as carbon emissions, bad working conditions, and human rights violations.
As a result, ESG investing is growing as companies are including ESG factors into their business model. Sustainability is being built into the decision-making processes of numerous companies and organisations worldwide.
When the COVID-19 pandemic hit, the world changed forever, accelerating global trends with a momentum that no one had witnessed before – including ESG. This trend is expected to grow even further over the next few years.
It seems that ESG investing is here to stay (and grow).
ESG vs Impact Investing
As we have seen, environmental, social, and corporate governance (ESG) investing concentrates on companies which are endeavouring to limit their negative impact on society.
Impact investing is similar to ESG in that both types of investments offer a financial return and are in line with the investor’s social conscience, but there are some key differences between the two.
Looks predominantly at the company’s operations; provides a framework for evaluating the company.
Pays more attention to the products and services the company offers.
Usually involves publicly traded assets.
Usually involves private funds.
The addition of ESG factors is used to improve traditional financial analysis.
The investments need to have a direct, measurable social and/or environmental positive effect.
Why are ESG values important?
Climate change – and the major, far-reaching fallout of it for economies and communities around the world – is the greatest risk multiplier. There’s no question that it is the defining issue of our time.
In the 2020 annual risk report from the World Economic Forum (WEF), the top five risks in terms of probability were environmental, and the top four of five risks in terms of impact were both social and environmental in nature.
Did you know that world ocean temperatures in 2021 were the hottest ever recorded? Another sign that our climate is changing at a quicker rate than previously predicted.
From more frequent and extreme storms to unprecedented heatwaves and flooding, from more and more species dying out to rising sea levels and increasing desertification, we’re noticing the impacts of human-created global warming. But we still have time to change course and limit the impact of the worst effects of the rapidly changing climate.
What is the Net Zero initiative?
At deVere, we are aware that with our size and capabilities comes an obligation to act responsibly. To this end, we continually aim to protect the environment, support social progress, ensure diversity and equality, and make ethically-driven, well-governed decisions.
deVere is one of 18 founding signatories of the UN-backed Net Zero initiative, the international alliance of powerhouse global finance companies that will help accelerate the transition to a net zero financial system. Our membership means we are committed to aligning all relevant products and services to achieve net zero greenhouse gases by 2050 and to set meaningful interim targets for 2025.
These commitments are in addition to the members setting science-based targets to reduce operational emissions in line with limiting global temperature rises to 1.5 degrees Centigrade.
Of the global alliance, deVere Group CEO and founder Nigel Green comments: “This represents a critical step forward in the transition towards a net zero economy by major financial companies committing to using their resources and best endeavours to achieve their own targets. We’re proud to be working with a group of internationally recognised standard-setting organisations and play a pivotal part in an alliance that will make a real, measurable impact.”
Other founding signatories include BDO, Bloomberg, Campbell Lutyens, Deloitte, EY, Grant Thornton, KPMG, The London Stock Exchange Group, Minerva Analytics, Moody’s, Morningstar, MSCI, PwC, SGX, Solactive, S&P Global and SSE.
deVere’s ongoing ESG commitments
We have our own paperless, digital-only challenger bank, deVere Vault. This means considerably less waste, less deforestation, and less carbon produced for clients and for employees.
We offer free, independent guidance to clients on socially responsible investing, with the aim of positioning $2bn of assets under advisement into environmental, social and governance investments within five years. When speaking with clients regarding ESG investing, we are keen to avoid ‘greenwashing’.
With this in mind, there are various factors that we should consider. These include the core values of the fund and in-fund reporting, the fund’s voting policies and track record and whether you are allowed to challenge them, whether the research is in-house or third-party, and whether they are signatories of the United Nations’ Principles of Responsible Investment (PRI). All of this should be presented up front and be transparent for our clients.
We are developing and bringing to market our own qualified sustainable investment products. While ESG highlights values, it’s also about returns, with environmentally and socially responsible funds continuing to out-perform the market and offer lower volatility.
We regularly produce and publish ESG-related surveys to help plot trends and to help guide the industry and the public in this area.
The judicious employment of technologies – we have cut all staff travel around the world by around 75% since March 2020.
With technologies and the ongoing digitalisation of our systems, including the vast majority of internal and external documents, we are moving towards becoming completely paperless in the next two to three years.
We recently appointed deVere Chief Operating Officer Beverley Yeomans as our Chief Diversity Officer (CDO), showing our commitment to making the globe-spanning organisation even more inclusive, diverse, and equitable.
We have recycling systems in place in all offices and are installing green walls, where it is possible to do so.
Last but not least, we provide ESG training programmes to all our employees.
What are the best ESG Investment Funds?
There are numerous ESG funds you can invest in. Of course, you could check them all out yourself and discover which ones you prefer. However, if you want expert advice about which fund or funds to choose, we strongly suggest that you contact our highly qualified ESG investment consultants today. There are myriad good reasons to work with our financial advisers, including the fact that they have a holistic view of the current financial scenario and will be able to give you valuable advice and steer you in the right direction.
Why should I choose ESG investing?
If you’re new to ESG, a good place to start is with companies that you are familiar with – which you know have the same values as regards ESG responsibility that you do – while discounting those that don’t. Moreover, doing research, watching the news, and reading business publications can also help. The main reason to opt for ESG investing is to ensure that your investment choices meet your priorities as far as environmental and social issues and problems go. That means that you won’t want to invest in companies that contribute to these problems. ESG investments often offer higher returns than their non-ESG counterparts.