Want to know where your money is invested? ESG investments could be the right choice for you

Barely a day goes past without environmental issues making the news – from rising temperatures in the Arctic, to protestors blocking motorways to protest against fossil fuels.

Interest and awareness of such issues has been heightened in recent weeks, driven by extensive coverage of the recent United Nations Framework Convention on Climate Change conference (UNFCCC), better known as “Cop27” in Egypt.  

From 6 to 18 November, the 27th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) will be held in Egypt, more commonly referred to as “Cop27”.

First taking place in 1995, this is the annual summit to assess international progress in dealing with climate change.

The rise in environmental awareness, and protestor activism, has also put a spotlight on how businesses operate, and how individuals invest their money based on attitudes to the environment and other ethical issues.

Such issues are analysed and measured under the heading “ESG”, which stands for Environmental, Social and Governance. These are the three criteria by which a company’s attitude to sustainability can be measured.

• “Environmental” covers attitude to climate change and pollution
• “Social” relates to working conditions and how company activity affects local communities
• “Governance” deals with the running of the company itself, including issues such as diversity, taxation, and executive remuneration.

According to Forbes, ESG was only referenced for the first time in 2005, yet by the end of 2021, leading investment company, JP Morgan, confirmed that that over $500 billion (£426 billion) was invested in ESG-integrated funds.

You may have read previous blogs about the basics of ESG investment, how to spot “greenwashing”, and the long-term prospects for ESG investing.

Now, find out about why knowing where your money is invested can be so important.

Environment concerns are driving many of your life decisions

A May 2022 climate change survey from the Office for National Statistics showed that 62% of people believe that rising world temperatures will directly affect them by the end of this decade.

Many aspects of the way we live our lives are driven by environmental concerns – from recycling your household waste to how you travel, and where you might go on holiday.

For an increasing number of people, these concerns can also have a bearing on how they invest their money.

In November 2021, a report from the Association of Investment Companies, confirmed that nearly two-thirds (65%) take environmental concerns into account when making investment choices, yet only 26% say it’s their biggest deciding factor.

Your personal values can affect your investment strategy

Your personal values are likely to have a strong bearing on how you live your life, and this can easily include how you invest your money.

For example, if you’re concerned about the environment, there’s a good chance that you wouldn’t want the money you pay into your pension to go to a company with a poor reputation on environmental issues, ethical standards, and the way they treat staff in poorer countries.  

If you don’t know where your money is invested, it’s very possible that you could be unknowingly supporting businesses that are acting contrary to your own ethical beliefs and values.

So, it’s good to have an understanding of your investment holdings so you can adjust them if you’re unhappy with where your money is being invested. 

Check how and where your money is invested

If you’re looking for some clarity over how your wealth is invested, your pension fund is a good place to start.

Along with your house, your pension is likely to be your biggest asset, so if you’re concerned about ESG-related issues when it comes to your money, how your retirement fund is invested is important.

If you have your own pension arrangement, it’s a relatively straightforward, though potentially time-consuming, process to find out full details of the funds your money is invested in.

Your pension provider or investment platform website will be able to give you information regarding the fund objectives, and the top holdings in particular funds.

Likewise, if you hold shares in individual companies, the company website, and annual reports to shareholders, will tell you a lot about their business ethos and attitude to ESG issues. Many companies now make a point of including such details under a specific ESG heading.

If you’re in an employer-sponsored arrangement, the trustees or administrators of the scheme should be able to provide you with a lot of the information you need to make a judgement on whether you’re happy with how your contributions are invested.

As well as checking your pension funds, you’ll also want to review other investments you may hold, such as ISAs and individual stocks and shares. 

You can access ESG portfolios through our investment proposition

If you’re concerned where your pension fund and other holdings are invested, we would strongly recommend that you seek expert advice and guidance.

We have a variety of Governed Portfolios, covering different risk profiles and time frames. These include five bespoke ESG portfolios.

After completing an in-depth risk analysis and gaining more insight into your motivations as an investor, we can help you to identify the most appropriate ESG portfolio for your investment needs. 

Get in touch

To find out more about where your money is invested, and our Governed Portfolios, please get in touch.

Email info@lebc-aspira.com or call us on 01454 632 495.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested. Past performance is not indicative of future performance.

A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.

The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.
 

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