In a world that is becoming more and more focused about the environment and ways to protect it, it is no wonder that I am being asked more and more about ethical investments.
Ethical investors were historically driven by their focus on doing what was best for the environment and communities and often this meant their investment could sometimes suffer. But times are changing and investing ethically can now be very rewarding.
When a company owned by Warren Buffett (one of the world’s most successful investors) bought a stake in BYD, then a little-known Chinese car company, some sceptics were ridiculing the 2008 deal. Car and Driver, an industry magazine, commented that it was “hard to take BYD seriously” because many of its cars seemed to be copies of older Japanese models, while their performance was lacklustre. “We drive faster in our driveways,” the magazine said. But Mr Buffett is now more than vindicated and the Chinese company’s focus on electric cars and climate-friendly motoring is delivering on the promise concealed in its acronym — Build Your Dreams. Its shares are trading at roughly 21 times forward earnings, or 2.5 times the ratio when Mr Buffett bought in. The deal stands as an example of how investing in renewable technologies can pay off and since 2008, BYD has become the world’s leading manufacturer of electric vehicles.
The BYD investment story is a small part of a much bigger trend. Investors are finding that if they are good to the planet and to people, they also end up, on average, benefiting themselves.
There is mounting evidence that funds which observe environmental, social and governance (ESG) standards in their strategies tend to outperform those that don’t by a significant margin.
Socially responsible investing (SRI) is another approach to investing ethically.
SRI is based largely on excluding certain companies from your portfolio, which you identify using a series of criteria related to, for example, environmental and social practices.
Socially responsible investing continues to grow and expand as investors have taken a shine to building profits with a purpose. There’s no longer a trade-off between profits and the planet!
At Chorus Financial we make sure that we understand the individual needs of all our clients, not just in terms of their financial goals but also what is important to them in terms of investing. Having access to the whole of the market means that we can chose the best possible investments for our clients and that includes investments with an ethical focus. As always, we promise to only recommend funds from well-known trusted companies, so you can be sure we aren’t going to invest your money into some unknown rain forest project in Brazil!!! Instead we turn to companies that you will have heard of and trust, companies like Aviva, Standard Life, Rathbones, Jupiter and Henderson who all have ethical focused funds. If you would like more information about ethical investing or if you would like to discuss your investment or pension requirements call Tracy on 693 107 044 or email firstname.lastname@example.org