Socially Responsible Investment (SRI) Solutions

In our experience everyone's definition of what it means to be socially responsible is different, as is everyone's idea of Socially Responsible Investing (SRI).

At present there is no industry standard definition of SRI, and although most definitions employ the word ‘ethical’ they embrace a number of different approaches.  Of these, two broad categories stand out and are known as positive impact investing and negative screening; although each follows a different investment process there is one common goal which is to serve a broad range of ethically-minded investors. 

Positive impact investing

This approach involves investing in companies which score well for their impact based on Environmental, Social or Governance (ESG) factors.

  • Environmental - dealing with the challenges of sustainability including cleaner energy, energy conservation, sustainable transport, water resources, waste management, pollution control etc.
  • Social – supporting positive outcomes for individuals, communities or society in areas such as housing, employment, education, transport, health care, safety etc.
  • Governance – a focus on business ethics including executive pay, bribery and corruption, board diversity and structure, treatment of employees, political lobbying, tax strategy etc.

Negative screening

This approach involves avoiding investment in companies that are involved in, or derive a significant proportion of their earnings from, the following areas:

  • Alcohol
  • Animal testing
  • Armaments
  • Gambling
  • Pornography
  • Tobacco

We believe that these sectors represent the most common areas of investor ‘concern’ but we accept that this list will not meet the ethical requirements of every investor.  For example, whilst we screen to exclude companies engaged in animal testing for the cosmetics industry we do not exclude companies which may use animal testing for medical science purposes.

Our SRI solutions

We currently offer two SRI Portfolios:

Model Portfolio Description Performance Benchmark
SRI Cautious Growth Designed for investors who seek capital growth over not less than 5 years through investment in a diversified range of ethically screened assets and are prepared to accept the prospect of some short-term capital losses to achieve a high return. Inflation (CPI) + 3% pa over a rolling 5yr period
SRI Balanced Growth Designed for investors who seek capital growth over not less than 5 years through investment in a diversified range of ethically screened assets and are prepared to accept periodic capital losses to achieve a higher return. Inflation (CPI) + 4% pa over a rolling 5yr period

Each portfolio benefits from the same methodology and approach as our existing multi-asset strategies but are constructed using a carefully blended range of ‘ethically’ screened investments to ensure that investors’ values are aligned with their needs. Our research and analysis includes screening undertaken by Vigeo EiRiS (Ethical Investment Research Service) to ensure compliance with our exclusion criteria. Periodically we may include funds within the ‘thematic’ element of our portfolios that have not been screened by EiRiS, and these will typically target companies that make a positive impact on the environment or promote sustainability.

Our portfolios are suitable for investors who are prepared to invest for at the least the medium term of 5 years plus (although our portfolios can usually be liquidated within 10 days), but are unsuitable for those seeking short term gains, or who have income requirements, or are unable or unwilling to take any downside risk.

Investors should be aware that in choosing to adopt a SRI strategy for their investment capital the size of the investable universe is currently more limited than is the case for more mainstream investments.  However, increasing investor demand for ‘ethical’ investments is resulting in a widening availability of SRI-screened investable options.