ESG comes into its own

By April 27, 2021LinkedIn
Sustainable development

Three letters, ESG, have become a major driving force in investment decisions.

ESG – environmental, social, and governance – considerations are playing an ever-increasing role in investment decisions. What used to be classed as ethical investment, socially responsible investment (SRI), and green investment, have now to some extent merged under the ESG banner. The table below gives a taste of the broad range of ESG investment considerations.


Environmental Social Governance
Carbon emissions

Forest destruction


Waste management

Resource use

Employee treatment

Child labour

Slave labour

Human rights

Workplace health & safety

Workforce diversity

Board diversity

Executive remuneration

Political influencing

Tax policy


In 2020, the popularity of ESG funds among the UK investing public grew dramatically, perhaps at least in part a response to the pandemic. The Investment Association’s (IA) ‘Responsible Investments’ category saw net retail sales more than treble to £10bn, almost a third of all 2020 sales and equal to the 2019 total for net retail sales. The IA 2020 statistics also show that over the year the value of funds in the category increased by two-thirds, to £45.7 billion.

The latest figures from the IA show that were ESG funds to be classed as a fund sector, they would represent the eighth largest of the IA’s 38 fund sectors. However, they are not a unique sector as there are ESG funds to be found covering nearly all investment areas.

Across these areas, ESG funds also take different routes to implementing the ESG approach. It is common for fund managers to rely on external ESG rating bodies, which do not always agree with each other. As is always the case with investing in funds, it is best to take advice on what is under the bonnet rather than relying on the marketing badge outside.

If you’d like to discuss ESG investment with one of our experienced financial planners here at FAS, please get in touch here

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