Our views

Sustainable investing: making an impact


Steve Bolton, Assistant Fund Manager

6 February 2017

Investors are becoming more aware of the companies in which they invest, and their impact on society. Negative actions by firms that pollute the environment, exploit workers or have questionable ethics can lead to adverse publicity and poor financial outcomes, often over a number of years; Volkswagen and BP are recent examples.  
So how can you avoid these pitfalls, and instead invest in companies which have a positive impact on society? 
There are many ways to select investments. In our RLAM Sustainable Funds range, we invest only in established firms that we believe will have a net positive impact upon society, and are well positioned to generate long-term returns. Our focus on strong environmental, social and governance (ESG) factors and on potential for growth through innovation provide a durable, competitive advantage. We are patient investors: we recognise that there’ll be times when markets are unfavourable for some of our securities, but our conviction in their sustainability and growth potential means we’re prepared to weather some short-term dips to reach our long-term goals. 
It’s important to distinguish between our sustainable approach and what is often called ‘impact investing’. Impact investing involves investing in organisations, ventures or projects that are designed specifically for a social purpose. While we think is admirable in many ways, we do not invest in ‘impact investment’ opportunities in our funds. 
Our portfolios consist mostly of listed, established companies across a range of sectors and industries; many of these are well-known brands. Across both equities and bonds, we choose securities that we think offer attractive returns for their given level of risk, and are issued by companies that we believe will have a net benefit to society. We avoid investment in firms that do not meet both our investment and sustainability criteria: we apply a positive filter, instead of a negative screening process. 
We believe that investing in these sustainable, well-managed companies is the best way to deliver stable, long-term returns.
Want to find out more? Visit our Sustainable Funds page.

Investors are becoming more aware of the companies in which they invest, and their impact on society. Negative actions by firms that pollute the environment, exploit workers or have questionable ethics can lead to adverse publicity and poor financial outcomes, often over a number of years; Volkswagen and BP are recent examples.  

So how can you avoid these pitfalls, and instead invest in companies which have a positive impact on society? 

There are many ways to select investments. In our RLAM Sustainable Funds range, we invest only in established firms that we believe will have a net positive impact upon society, and are well positioned to generate long-term returns. Our focus on strong environmental, social and governance (ESG) factors and on potential for growth through innovation provide a durable, competitive advantage. We are patient investors: we recognise that there’ll be times when markets are unfavourable for some of our securities, but our conviction in their sustainability and growth potential means we’re prepared to weather some short-term dips to reach our long-term goals. 

It’s important to distinguish between our sustainable approach and what is often called ‘impact investing’. Impact investing involves investing in organisations, ventures or projects that are designed specifically for a social purpose. While we think is admirable in many ways, we do not invest in ‘impact investment’ opportunities in our funds. 

Our portfolios consist mostly of listed, established companies across a range of sectors and industries; many of these are well-known brands. Across both equities and bonds, we choose securities that we think offer attractive returns for their given level of risk, and are issued by companies that we believe will have a net benefit to society. We avoid investment in firms that do not meet both our investment and sustainability criteria: we apply a positive filter, instead of a negative screening process. 

We believe that investing in these sustainable, well-managed companies is the best way to deliver stable, long-term returns.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.