Investing with a heart: embracing ESG for a sustainable future
In today’s world where consumers increasingly demand ever-evolving and improved practices, prioritising profit alone is no longer acceptable - or beneficial - for business. Successful business’s follow the Environmental, Social, and Governance (ESG) approach to meet these modern consumer demands. It’s profitable and helps provide a competitive edge.
In simple terms, ESG investing is about choosing to invest in companies that care about the world, treat people right, and have solid leadership. It's like putting your money where your heart is – aligning your values for both profit and positive impact.
We believe that considering ESG factors is integral when deciding where to invest and is vital to successful long-term investing. Companies with strong ESG values tend to be more resilient in the long run which means better returns for investors over time. So, investing in companies striving for a better world is not just ethical – it's smart. Achieving profitable and impactful returns while contributing to initiatives that are positive for the planet and society is a win-win. It follows that it also creates a better world for future generations.
All the managed funds we use in our client portfolios have ESG policy embedded in their investment decision process. This ranges from the exclusion of companies involved in things as fossil fuels, tobacco, weapons manufacture, etc. (a very basic approach) to sophisticated analysis that dives deeper and scores companies on things like greenhouse gas emissions, employee turnover rates, commitment to diversity, and controversy.
For example, the Antipodes Global Fund - Long invests in companies listed on global stock exchanges (both developed and emerging markets) and is part of our International Equity strategy. They take ESG seriously and sum up their approach as follows - “Responsible investing is foundational to our culture with Environmental, Social and Governance factors incorporated in each of our investment strategies and in our overriding investment process”. This approach to investment decision-making is in line with our belief that to be a successful investor it is key to gain a deep understanding of companies by considering material ESG issues. It makes sense to us that companies with robust ESG attributes are more likely to achieve sustainable profits over the long term. The return on the Antipodes Global Fund - Long for the last year was 11.4% and averaged 9.2% per year over the last 5 years (as at 30 Apr 2024).
Richard Grimes, CERTIFIED FINANCIAL PLANNER (CFPCM), Director and Financial Adviser