Telford Mann ESG Process

Telford Mann ESG Process image

‘To BP or not to BP? That is the question – The dilemmas of investing ethically’

Not all that long ago, those wanting to invest whilst also upholding ethical responsibilities may have felt they faced a binary choice – were they investing to make money or did they want to use their capital to do the right thing?  Often, constructing an investment strategy from a smaller, more concentrated ‘pool’ of suitable options meant sacrificing investment returns, or taking more risk, to achieve the equivalent return as an ‘unconstrained’ strategy.

The ethical investment universe and attitudes towards it have undergone a step change in recent years. As public and corporate consciousness have begun to change considerably, ethical investment factors have become more mainstream. The advent of new and disruptive technologies, challenging the status quo of global hegemony of ‘big business’, allied with an increased consumer and shareholder awareness about topics such as climate change and social inequality, have driven ethical, social and governance (ESG) criteria firmly into the spotlight.

For investors, more choice often means more questions. For example, traditional ethical investment criteria often involve a negative screening process. I.e. the exclusion of particular companies or sectors from a portfolio.  Whilst these strategies still exist, increasingly ‘standing on the outside, shouting in’ isn’t deemed necessarily to be either the best or only way to bring about a change in business practices. The approach that increasing numbers of investors take is that more can be done to improve the environment through active participation and engagement as a company shareholder than can be achieved by excluding the company entirely.

For example, to decide to either avoid investing into the big oil and gas companies given their polluting effect on the environment, or to decide that transformative environmental change within those same companies could be achieved by becoming an activist investor within them. In the attached document, we set out our approach to investing ethically, including our views on topics such as the measurement and implementation of ethical investment criteria, together with how we apply this criteria when constructing our own investment portfolios.