ESG stands for environmental, social and governance (ESG). How a company manages these aspects of its business can be a really useful indication of its overall quality. Investment managers can use ESG criteria to identify potential risks and opportunities that could affect the performance of a company.

ESG factors can include how a company manages many aspects of its operations and culture. For example, we look at how a company:

Environmental (E)
  • manages waste and pollution, including greenhouse gases
  • contributes to or controls its impact on climate change
  • manages natural resources including water.
Social (S)
  • treats its employees and their working conditions
  • values human rights and its stance on child labour and slavery
  • considers impact on wider stakeholders and society, including local communities and animal welfare.
Governance (G)
  • approaches diversity and how it structures its board and management
  • rewards and pays executives, gender pay gap
  • limits its exposure to corrupt practices and deals with bribery
  • makes, declares or avoids political donations.

Our approach to ESG

At 1825, we believe that sustainable and ethical options for investing does not have to mean sacrificing wealth.

All of the actively managed funds within the 1825 Portfolios have ESG integrated into their investment processes.

This approach scores a business’ performance across the following areas:

  • Environmental: this would include air/water pollution, energy efficiency & carbon footprint
  • Social: for example, human rights, gender equality, health & safety records, data protection
  • Governance: for example, company ownership, executive diversity, remuneration, employee engagement, bribery and corruption

Companies that score strongly across each of these three categories are likely to have better financial performance. Numerous studies into ESG investing have shown that companies that score highly are more likely to go on and provide greater long term share price performance compared to those that score poorly.

Tailored to you

We’ve seen a growing number of investors who do not wish for their portfolios to be focused solely on capital return. Instead many are also looking for their funds to help make a difference whether from an environmental perspective or helping society.

When it comes to investing we can work with you to create a strategy that can have a positive impact on the environment and society without losing sight of your financial goals.

For clients with strong ethical views we are able to refer them to one of our Discretionary Investment Manager partners, who are able to create bespoke portfolios.