Green Path Portfolios
A low-cost, actively managed portfolio service dedicated to sustainable growth through the use of Environmental, Social and Governance (ESG) investment values.
Socially responsible investment (SRI) and the use of ESG investment criteria to guide investments has moved into the mainstream. There is now overwhelming evidence that sustainable investment can deliver comparable returns with traditional investments and also offer opportunities for outperformance based on reduced risk.
All our investments are rigorously screened using ESG criteria. The latest strategies, which we adopt, take a positive approach by seeking sustainable investments that have a greater potential to boost returns. This is achieved by integrating environmental, social and governance (ESG) considerations into the investment processes.
The FT reports that since 1990, the MSCI KLD 400 Social index, comprising companies with strong sustainability profiles, has outperformed the S&P 500, with annualised returns of 11.2 per cent versus 10.7 per cent. Sustainable companies are typically less exposed to tail risk such as environmental accidents or punishment from regulators. (FT, ‘Sustainable investment can propel long term returns’, 18/9/2018).
Investments are considered in terms of their impact on the environment. This may involve looking at issues such as pollution, waste management or climate change.
Social aspects of investments include the employment practices of companies, for example, making sure they’re not involved in modern day slavery.
The focus here is on how a company that we invest in is managed. Does it treat its stakeholders (shareholders, employees etc.) fairly? Does it pay its’ executives too much?
- Globally diversified investment
- Maintain the integrity of the environment and the use of natural resources
- Recognise the civil, economic and social rights of every human being
- Promote sustainable development today without compromising future development
Green Path portfolios focus on a number of key factors
- Climate change is becoming a reality.
- Good corporate governance is important to achieve a sustainable business.
- A transformation is occurring in energy sources with a rapid rise in renewable energy.
- Technology is changing what we demand and what we consume. Only adaptable companies will survive.
- Investors can be quick to punish companies found to be using child labour or damaging the environment.
- Information on ESG policies of companies is more widely available.
- Regulation is forcing companies to adopt ESG compliant strategies.
ESG investing has been driven by key changes in investor behavior. Many private investors want a more active, objective driven approach. There is also a realisation that ESG focused investments are not just philanthropic but a way to future proofing your investments where performance need not be compromised.
Sustainability and fair opportunity have led to investors pursuing the concept of a healthy balance between investment returns and the long-term preservation of our natural resources and the respectful treatment of labour and equality.
All of these factors are in themselves forceful drivers of change. Taken as a whole, the ESG effect has become a compelling element moving to the centre of institutional financial activity.
For a rapidly increasing number of investors, ESG forms the core focus of their investment strategy. This is not simply a moral principle, but as the most relevent factor in providing a model for sustainable returns.