Sustainable and Responsible Investment

What is Sustainable and Responsible Investment?

Any investment that takes environmental, social, ethical or governance issues into account to a significant extent may be classed as ‘SRI’:  a ‘sustainable’ or ‘responsible’ investment option.

SRI includes investment styles that are commonly referred to as ‘ethical investments’ and ‘green investments’ and may cover almost any asset type – although non equity options are less common than equity options.

These terms are broad descriptions of an important part of some funds’ investment processes.  They can refer to aspects of how investments are bought, sold or managed by investment managers.

In the individual investor (retail) market screened ethical funds are probably the best known area of SRI.  Themed investments are now challenging this lead, as issues such as the environment and sustainability increasingly taking centre stage.

There are around 100 core (or primary) retail ethical funds available for individual investors – although there are hundreds more sub-funds. These include a wide range of investment issues, approaches and strategies.

Click here to for our SRI Styles Directory.

What makes SRI funds different from other investments?

What makes SRI funds different from other investment styles is the additional environmental, ethical, and /or governance information an investment manager take into account – and how they deal with it.

Together, the SRI issues considered and the approach applied to them, form a fund’s SRI strategy. Both the approaches employed and the issues covered can be very diverse with different investment managers dealing with different issues in different ways.

SRI offers many different asset types, ethical approaches and investment options. As such these funds cannot sensibly be grouped together in a single group or sector as they often have little in common.

There are no rules or definitions that dictate what is or is not an SRI, green or ethical investment – so it is useful for advisers to familiarise themselves with the different core strategies that exist – as this can make advising on this area a great deal easier.  This can be a good investment of time considering that interest in green and ethical issues has increased significantly over recent years.

Current estimations put core ethical funds under management at around £12 billion (EIRIS, 2013). This growth looks set to continue its upward trend as environmental, social and sustainability related issues increasingly take centre stage in people’s everyday lives.  This estimate is in addition to investment in ‘impact investment’ or ‘social investment’  and funds covered by responsible engagement or integrated SRI strategies.

A database of regulated retail SRI funds is accessible via our Fund Eco Market tool.

This information is for use by UK professional financial advisers only. SRI Services is not authorised to give investment advice, if you are an individual investor you can find an IFA on www.unbiased.co.uk. The information on this site does not in any way constitute advice or recommendation. The information and tools are intended to compliment, not replace existing adviser information sources. Investment decisions should not be based on the information contained on this site alone. Please confirm fund information with fund managers. We cannot be held in responsible for advice given as a result of using this site and are not responsible for the content of sites linked to this service, we do however of course take every effort to ensure the content of this site is as accurate as possible at time of publication.