Socially responsible investment opportunities with @energybonds

socially responsible investingSocially responsible investing (SRI) may also be called sustainable, socially conscious, green or ethical investing and refers to investment strategies which consider not only the financial return on the investment, but also the social benefits that occur with the investment. 

Socially responsible investors strive to encourage corporate practices that promote human rights, diversity, environmental stewardship and consumer protection.  Many socially responsible investors will avoid investing in businesses that are involved with alcohol, tobacco, weapons, gambling and pornography (to name but a few areas).  The main areas of investment recognised and encourage by the SRI industry are the environment, social justice and corporate governance.

Socially responsible investment

Socially responsible investment areas in the UK are expanding due to the government’s commitment to reduce carbon emissions.  The Climate Change Act is calling for 15% of the UK’s energy to come from renewable resources (such as solar and wind power) by 2020.  Domestic consumption of energy in the UK accounts for just 34% of total energy use, while industry uses 43% and commercial and public premises another 18%.  This means that businesses and industry in the UK will play an important role in ensuring that targets are met.

Renewable Energy

If you’re looking for socially responsible investment opportunities, then investing in renewable energy or renewable technologies has become a viable option in this time of economic uncertainty.  Ethical investment no longer means sacrificing returns as many of the SRI funds in the UK are performing so well these days with the increase of environmentally friendly or climate change themed funds.  The discussion about responsible investment has moved into the mainstream in recent years due to the global economic situation and the need for ‘responsible capitalism’.   The Guardian recently reported socially responsible investment to be “transitioning for a niche financial strategy . . . to an important consideration for actors across the financial sector”.

Principles of Responsible Investment

The United Nations backed Principles of Responsible Investment were developed by an international group of institutional investors to reflect the increasing relevance of environmental, social and corporate governance issues to investment practices.  Signatories (who include banks, pension schemes and asset managers from around the world) are encouraging other investors to adopt the Principles.

Ethical investment

The UK Investment Management Association (IMA) whose members manage more than £4.5 trillion of assets on behalf of UK and overseas clients, clearly demonstrate how ethical investment is on the increase.  As of 30th June, 2013, there was approximately £12.2 billion invested in Britain’s green and ethical retail funds – this does not include funds outside of the UK or in off-shore funds.

Green funds

With ethical investment on the rise and proving to offer viable financial returns, investing in green funds such as clean energy projects and renewable energy resources represents an increasingly efficient means of investment.  Gerry McGowan, chief executive of CBD Energy, which has launched Energy Bonds in the UK recently discussed why Energy Bonds are an attractive option for investors, “Through retail bonds our investors can engage directly with companies like ourselves, cut out the middle man, and earn an attractive and sustainable income on their capital.” A recent YouGov poll for NEIW (National Ethical Investment Week) revealed that 55% of potential clients plan to look into investments with ethical elements, while 74% of independent financial advisors (IFAs) report that clients are asking for ethical investment opportunities.