You might not have heard of the Sustainable Investment and Finance Association, but you may have heard of Good Money Week, formerly National Ethical Investment Week.
In 2024, Good Money Week runs from 30 September to 6 October and aims to encourage us all to think more sustainably.
Specifically, to think about sustainability in terms of where we put our money, and how our investment and banking decisions can affect the environment and wider society.
You might already be making sustainable choices, from the clothes you buy to the electricity you use, and the holidays you go on. But could you be doing more?
Aligning your money with your values on sustainability and ESG (environmental, social, and governance) factors is easier than ever.
Keep reading to find out more.
The ESG and sustainable finance market is growing
At the start of 2024, Bloomberg Intelligence reported that global ESG assets are projected to top $40 trillion by the end of the decade, a figure that would account for a quarter of all global assets under management (AUM).
That’s a huge figure and one that makes abundantly clear the recent rise in appetite for sustainable investment.
Indeed, FTAdviser reports a 2,500% increase in ESG inflows between 2014 and 2019. The below from Statista, meanwhile, highlights the continued growth since that date.
Global AUM in sustainable funds (US$):
Source: Statista
Increased inflows have helped to dispel some prevalent myths around ESG investing. And, as we have seen, the market only looks set to grow.
So how might you make your money work harder for the environment and society?
3 ways to align your savings and investments with your values
1. Check where your pension is invested and consider a move from default funds into sustainable ones
Co-founded by filmmaker Richard Curtis, the non-profit organisation Make My Money Matter campaigns for a greener financial sector.
It recently reported that for every £10 that is placed into a pension, £2 is linked to deforestation. With around £10 billion paid into UK pensions each month, the impact of this link is clear.
But there are steps you can take. Check in with your private and workplace pension provider to see how your funds are invested. If you haven’t selected a fund preference, you’ll be in the default fund, which might not align with your ethical, sustainable, or ESG requirements.
It is highly likely, though, that ESG funds are available.
Make My Money Matter suggests that UK pensions have the potential to invest more than £1 trillion in climate solutions by 2025. This would amount to 50% of the money needed for the UK to reach net zero. Your pension pot could help to meet this target.
2. You can move your investments into ESG funds so they align with your values
One of the myths attached to ESG investing in its early days was that aligning your money with your values meant sacrificing returns.
In April 2023, FTAdviser reported on this issue and found that the impact of ESG choices on investment performance was “non-existent”.
What’s more, as ESG investing’s popularity – and its inflows – increased, so too did the fund options available to you. Think about the factors that mean most to you, from avoiding fossil fuels to supporting companies with the best track records on human rights.
At Globe IFA, we can help you revisit your fund choices to ensure they align with your values.
3. Check in with your bank and consider switching if their ESG credentials fall short
Make My Money Matter recently reported that the UK’s “big five” high street banks provided fossil fuel companies with £42.3 billion in 2023.
The big five are:
- Barclays
- HSBC
- Santander
- Lloyds
- NatWest
Of course, when you save with any bank, your money is used to finance its other activities, which might mean lending to companies with bad records on ESG issues.
In October 2023, Which? reported on the green credentials of many leading banks. It found that Lloyds was the greenest of the big five, although plenty of lesser-known banks fared much better.
While conducting your own investigations can be time-consuming, you will have peace of mind that your money isn’t being used in ways you fundamentally disagree with.
Get in touch
Please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you manage your long-term financial plans.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
