Whether described as socially responsible or sustainable and responsible investing, SRI has grown dramatically in the past few years, thanks largely to a new group of investors wanting their money to be managed under the same principles that guide their own lifestyle.
We are moving further away from what we used to describe as green or ethical investing which was essentially all about where money was invested, avoiding alcohol, tobacco, pornography and armaments, for example.
There is still a huge emphasis on investing in the right types of company, still avoiding ‘booze, baccie and bombs’ stocks, but there is a change in demand from investors who have been handed the SRI gavel from companies who themselves were given it by governments.
In our industry, over the past decade fund groups have been pressured and benefited in equal measure from legislation, improved business practices and investor demand.
The end result is that fund managers – driven by their investors – are investing more widely in companies that follow their own SRI-driven governance practices whatever business they are in.
But are SRI investors sacrificing returns for their principles or can they have their cake and eat it?
“The future is performance,” says Neil Brown, a pan-European equities manager at Alliance Trust Investments, whose fund sits on Alliance Trust’s sustainable futures desk, so you can see the emphasis of how he invests.