Quintin Rayer explains why ethical investing is about more than paying lip service to corporate social responsibility.
Advisers may find that they face a dilemma with ethical investing; while advisers and clients often accept it matters, they fear underperformance. Human activities have generated threats including climate change and its consequences; lifespan is increasing, so demographics will impact healthcare and pension costs; while an expanding world population demands improved living standards as less developed countries modernise. Behaving in an unsustainable manner will cease to be an option.
However, there is research that should serve to give pause for thought for those who are tempted to assume that it is ‘obvious’ that ethical portfolios ‘must’ underperform the wider market, which may help allay the dilemma faced by advisers considering discussing ethical investing with their clients.
The following article is republished with the kind permission of the Personal Finance Society.
The Chartered Insurance Institute (CII) exists to promote higher standards of integrity, technical competence and business capability. With over 112,000 members in more than 150 countries, the CII is the world’s largest professional body dedicated to insurance and financial services.
Q G Rayer (2017), Why ethical investing matters, Personal Finance Professional, www.thepfs.org, Winter 2017, 7 December 2017, p44-46.