UK financial services giant Royal London has joined forces with Square Mile Investment Consulting and Research in a bid to help advisers understand the world of responsible investments.
They believe that, alongside a surge in interest in ESG solutions, there is a level of confusion among financial advisers on the specific outcomes they aim to achieve, how suitable they are for investors, and what terminology they should use to describe such products.
The two firms will create a series of videos and guidelines to help planners navigate the range of responsible investment solutions available to them.
Investors have different priorities and expectations when it come to ESG investing, and advisers should be able to accommodate these differences by providing an overview of the four approaches to responsible investments.
According to Royal London and Square Mile, they are:
- Ethical exclusions funds which will avoid businesses or sectors that harm society or the planet;
- Responsible practices funds which consider the operational practices of the companies they invest in, while encouraging them to improve their environmental and social performance;
- Sustainable solutions funds which actively seek to invest in companies that provide solutions to social and environmental challenges and believe in the long-term financial benefits of doing so; and,
- Impact investing funds which aim to make a wider measurable positive social and environmental impact, as well as meet financial objectives.
The educational material will be made available in the coming weeks on Royal London’s website.
Adviser and client confusion
Steve Kenny, chief distribution officer at Square Mile, said: “One of Square Mile’s guiding principles is to help people to be better informed when making investment decisions. Perhaps, nowhere is this more relevant than in making sense of responsible investment. Funds which are aimed at making a better planet for all, whilst tackling some of the greatest challenges society has ever faced have become a mainstream investment option.
“However, we acknowledge that the funds industry has some way to go in establishing a common terminology framework to address any confusion among advisers and their clients.
“Royal London is highly-regarded in the field of responsible investment and the clarity it uses around its proposition is widely recognised by advisers. We were therefore delighted to partner with them in the production of these videos and guides to counter any misunderstanding and to encourage greater participation in responsible investment solutions.”
Ryan Medlock, senior investment development manager at Royal London, added: “One of the most striking observations is that advice firms are all currently at very different stages in the adoption of responsible investment within advice processes.
“We’re delighted to collaborate with Square Mile in this area and tap into their unrivalled expertise of both the advised market and responsible investment. The material produced will not only support advisers’ understanding of different responsible investment approaches, it’ll also help them embed responsible investment considerations within existing fund research and due diligence processes to combat the evolving threat of greenwashing.”
