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  • You can make money and do good at the same time

    Why ESG should be part of your investment strategy.

    Last Updated: 1 January 2003

    Women could be shaping financial markets for the better.

    Many of us want our investments to reflect our personal values and are leading the charge when it comes to demanding Environmental, Social and Governance (ESG) issues are considered as part of an investment strategy.

    And in some cases, we’re even prepared to give up part of our returns if it reflects our values. Yet we may not have to.

    Estimates suggest that by 2025 roughly 60% of the UK’s wealth will be in the hands of women. Together with the fact that some £5.5 trillion is expected to make its way into ESG-conscious millennials’ hands over the next few decades.

    This shift in power means companies will be held more to account for their impact on people and the planet.

    Please note: in this article we explore ESG investing, but it’s not personal advice. If you’re not sure what’s best for you, ask for financial advice. All investments can fall as well as rise in value, so you could get back less than you invest.

    The future is bright, the future is ESG

    If you are not already considering ESG with your investment, it could be something to consider. Especially if you’re a woman. That’s because ESG aims to tackle unequal pay, gender diversity and countless other issues that impact us.

    One of the easiest ways to invest is with a fund. And with a fund that considers ESG, your money will be pooled together with other people, and then managed by a fund manager who follows these principles. Allowing you to grow your investments while staying true to your values.

    ESG is one of the many different approaches that sit under the responsible investing umbrella.

    Learn more about ESG and other responsible investing strategies

    Two Responsible investment case studies

    Aegon Ethical Equity

    The Aegon Ethical Equity fund is a UK-focused fund that has been managed by Audrey Ryan for more than two decades.

    The ethical fund aims to stand out from the crowd with client-led exclusions, like tobacco and alcohol producers to munitions manufacturers and companies that use animal testing. After this screening, at the last count, around 45% of the companies in the FTSE All Share index remain investable options for the fund with a bias towards higher-risk small and medium-sized companies.

    These exclusions are reviewed every two years following an investor survey. In the past, findings from the survey have influenced the team to change their stance on matters such as oil & gas, removing the sector entirely from the fund.

    After the extensive screening approach has narrowed the fund’s investable universe, Ryan and her team aim to identify and understand the main ESG risks of each company, industry and sector they invest in. They believe companies that lead the way in governance and sustainability can outperform over the long run.

    This fund holds shares in Hargreaves Lansdown plc.

    More information on Aegon Ethical Equity, including charges

    Aegon Ethical Equity Key Investor Information

    Ninety One UK Sustainable Equity

    Ninety One UK Sustainable Equity fund also invests in the UK, but focuses on companies making a positive contribution to society or the environment.

    The fund has been managed by Matt Evans since launch in 2018. Evans’ positive impact approach makes it different to other funds in the IA UK All Companies sector, and to other responsible UK equity funds.

    Ninety One exclude companies directly involved in the manufacture and production of controversial weapons from their funds. And specifically exclude companies in sectors like tobacco, oil & gas and coal. Violators of the UN Global Compact principles (a UN pact on human rights, labour, the environment and anti-corruption) are also excluded. Overall, around a quarter of the FTSE All Share index is excluded. Matt can use derivatives to help him invest, which adds risk if used.

    Evans then assesses companies across three pillars:

    • A financial sustainability assessment
    • An internal sustainability assessment
    • Then an assessment of any positive impact the company makes

    This helps evaluate the impact that financing a company's products or services makes to the environment, society, or both.

    More information on Ninety One UK Sustainable Equity, including charges

    Ninety One UK Sustainable Equity Key Investor Information

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