ESG criteria and considerations
Sustainable funds are not all the same
Environmental, Social and Governance (ESG) factors are the three pillars of sustainable investing. As such, fund managers will typically consider the following within these three areas when analysing investment opportunities:
- Environmental issues – how a company is addressing issues such as climate change, resource depletion, waste, pollution and deforestation
- Social issues – a company’s policies and record in relation to human rights, modern slavery, child labour, working conditions and employee relations
- Governance issues – a company’s record in relation to bribery and corruption, executive pay, board diversity and structure, political lobbying/donations and tax strategy.
A potential issue for investors is that sustainable funds adopt different policies and investment approaches. In order to create a common language for advisers, fund managers and investors, the Investment Association (IA) has introduced a range of definitions for investment approaches.
Implications when recommending funds
Some clients may be satisfied that a fund is managed on a broadly sustainable basis. Stocks from certain ‘sin’ sectors may be included, for example, if the company has demonstrated that their ESG credentials are moving in the right direction. However, due to ethical, moral or religious considerations, other clients may state that certain stocks or industry sectors should be avoided completely.
It is therefore important to check a fund’s investment approach and policy on exclusions before making a recommendation.
In our Adviser Guide to Sustainable Investing, we examine the various types of funds and approaches in more detail.
Adviser guide to sustainable investing
To aid your client discussions, we’ve produced a guide that explains all things ESG to your clients.
Sustainable investing glossary
Our glossary defines some of the more frequently-used terms in this field of investment.
Sustainable fund options on FundsNetwork
We offer over 143 sustainably-managed funds from 45 different fund groups through our platform.
Discover the sustainable fund options on FundsNetwork
In total, we offer over 210 sustainably-managed funds from 65 different fund groups through our platform.
Download fund list
Important Information - Please note that the value of investments and the income from them can go down as well as up so your client may get back less than they invest.
Virtual event: Investing in a sustainable future
Fidelity and external experts shine a light on the rise of sustainable investing and discuss the implications for policymakers, companies and the investment industry. Visit Fidelity's post-event hub to access session recordings and summaries, as well as additional bonus content from their investment team.
Catch-up on-demand
Fidelity Analysts : ESG in the spotlight
Fidelity discuss the role that engagement and proprietary sustainability ratings play in influencing corporate behaviour.
Overcoming fast fashion’s hidden costs
Fidelity European equities manager, Matthew Siddle looks at how investors can navigate these issues and discusses the importance of constructively engaging with the industry.
5-minute read
Establishing a more sustainable Asian investment
How does Asia measure up in a new world where greater emphasis is being placed on social good?
Watch on demand