Responsible Investing: It’s here to stay

“When I do good, I feel good. When I do bad, I feel bad. That is my religion.” As a firm, what have you done to have a positive impact on your colleagues?

As a firm, what have you done to change the way you construct portfolios to have a positive impact on society? How do you see the impact space developing? What are the barriers?

The Covid-19 crisis has provided considerable time for reflection on what is important. The well-being of family, friends, colleagues and more widely, the fragility of our world, has taken on new and material meaning. As this drama unfolds, it appears that this change of priorities is permeating the way we think about investments and financial planning as well.

Developments at Square Mile reflect the increasing interest our client base has shown in the areas of responsible investing. In 2019 we introduced our ESG assessments across every fund and fund manager group which sits in the Square Mile Academy of Funds. Subsequently, we have introduced Square Mile “Responsible Ratings”. We rate and review funds to help advisers identify those funds which can help fulfil their clients’ aim to have a positive effect on their own financial wellbeing, and the wellbeing of the world around them.

The impact space is also becoming more popular with awareness being amplified during the Covid-19 crisis. Recently, Square Mile completed the acquisition of 3D Investing. This is a service which assesses the impact of funds by examining portfolios at stock level. The 3D approach looks to evidence that funds being awarded 3D ratings adhere to the philosophy of “doing good, avoiding harm and leading change” by mapping their individual holdings to specific United Nations Sustainable Development Goals. Square Mile also offers its “Responsible Future” portfolio which comprises a significant number of funds with the Square Mile Responsible rating. This was launched in February 2020, just ahead of lockdown and has performed well relative to the overall market during the large drawdowns during that time.

Investor interest in this area is only going to grow. There are a number of megatrends in the market such as opportunities in technological advances, the transition to low-carbon and supply chain disruption. Whilst Covid-19 continues to swirl around us, it only reinforces the delicate balances that exist between the global environment and investors. The importance of using investments as a force for good has well and truly been released from its bottle. There is no going back.

Jake Moeller, Senior Investment Consultant