Socially responsible investing

According to our research, four out of five Skipton financial advice customers base some of their spending decisions on the social and ethical practices of companies. It influences where we shop and the places we choose to eat.

84% of Skipton customers make some effort to avoid purchasing goods and services from companies whose activities they disapprove of.

79% actively seek out organisations whose activities they approve of.

Figures based on 220 Skipton customers, aged 25-75, June 2016

If you’re socially conscious about how you spend your money, you might also wish to consider the way you invest it. At Skipton we are proud to offer financial advice for those who want to take an ethical or socially responsible approach to investing.

What is socially responsible investing (SRI)?

In a nutshell, SRI means investing into funds that focus on environmental, social, and governance (ESG) causes. This can be achieved by avoiding contentious investment areas, or investing into organisations who provide solutions to these socially responsible issues – and all shades in-between.

Like more regular investment funds, SRI funds aim to deliver positive returns for you, the investor. What’s different is the way they set out to achieve that goal.

SRI funds focus on investing into businesses and companies that share certain values. They do this in three ways:

  1. Screening. This approach is used to find companies that meet the fund’s SRI criteria, and to screen out those who don’t.
  2. Themes. A focus on companies or products that aim to address certain SRI issues, or a steering away from areas that don’t necessarily enhance our environment.
  3. Engagement. SRI fund managers use their influence to encourage companies to better their ESG practices. As a shareholder, the manager can also vote against certain policies.

Our expert says...

The overall aim of an SRI fund is no different to other investments – they are looking to deliver strong performance. Yet an SRI fund manager does so in a way that it isn’t as odds with what the fund tries to do from an ESG point of view.

Scott Ashworth, Senior Technical Research Adviser

Is investment performance difficult?

It can be, but that doesn’t mean it has to be worse. Scott explains: “There could be periods where SRI funds don’t perform as well as regular funds, as their more restrictive mandate could mean the manager can’t invest in more controversial sectors such as tobacco and alcohol.

But at other times SRI funds will perform better than regular funds. Especially if there is a growth in particular areas that SRI funds are more likely to invest in, such as sustainable energy. As with any investment you need to commit your money for at least five years, and judge each fund’s performance over a market cycle

Can I choose my own SRI fund?

There are many well known SRI funds available, which understandably have strong reputations for their moral and ethical stance. But it’s not simply a case of investing into any SRI fund, as not all funds share the same approach. You have to be confident it’s right for your needs, and that the way it operates matches your core beliefs.

If you have strong feelings towards particular social responsible issues, it’s best seeking advice on funds that match your views.

Help available

At Skipton we offer personalised financial advice – which includes investing in a socially responsible way if you wish.

We regularly research the market and have a dedicated panel of SRI funds. If it’s important where your money is invested, we can advise on funds that match your moral and ethical views.

Your next steps

If you're ready to talk to us about investing, then you can find out more on our financial advice website. Here you will be able to find your nearest financial adviser, book a financial advice review or give us a call and talk to a member of our Review and Financial Advice Team.

Our recommendations are likely to include stock market-linked investments. These aren’t like building society savings accounts, as your capital is at risk and you may get back less than you invest. The value of your investments and any income from them may fall as well as rise.

Version Info: