SRI, ESG, Sustainable investment, and Ethical investment, are a selection of the most common terms used to indicate an investment based upon sustainability, social, environmental and ethical concerns. Deciphering the nuances between these terms is not easy, not least because they often appear interchangeably, with their depth of application varying from firm to firm, and fund to fund.
Strong Corporate Governance is of interest to any investor as it provides the best indication that a company is able to implement its business strategy and succeed within its chosen industry. Reflected in the term ESG (Environment, Social and Governance), company management is also becoming increasingly accountable for its governance of matters which concern more than simply profit, and investors are keen to understand what companies are doing in this respect.
RD:IR’s ‘Governance and Responsible Investment’ features highlight and distinguish between these investment strategies alongside consideration of corporate governance, as we develop our capacity to support companies with identifying, understanding and communicating with investors that invest with Governance and Responsible Investment issues in mind.
Recognising Responsible Investment
The inclusion of environmental, social and governance ESG factors, both into specialist and mainstream investments, evidences a growing concern for climate change, social inequality, human rights, and management of access to water and other natural resources. It also tells us that not only are investors fully aware that the actions of global businesses have a considerable impact on such matters, but also that as owners and stakeholders of companies, investors can wield a certain level of power to encourage good business practice. As well as supporting sustainable development goals, motivations for responsible investment strategies include risk management, the inclusion of clients’ demands to incorporate religious, moral, ethical or lifestyle standards into their investments. Undeniably also, for certain investment firms it simply reflects the acknowledgement of a growing market for responsible investment capabilities.
How RD:IR can help
Responsible Investment can mean different things to different people. It is our aim to assist companies with their understanding of what Responsible Investment (or SRI or ESG) means to their investors, what themes in particular investors seeks disclosure on, and how the information is incorporated into the investment process.
Over the past year we have developed and released new features on our proprietary, online investor relations service, IR InTouch, that enable companies to search Governance (G) and Responsible Investment (RI) contacts and meetings, detailed Governance and Responsible Investment profiles, shortform G&RI profiles, and one-page summaries including historical meeting data and Proxy Advisory Agency influence. Regarding our most integral service, the shareholder analysis, a G&RI flagging system is currently under development…watch this space!
This post has been written by Alice Essam. Alice is an IR Researcher at RD:IR with responsibility for Governance and Responsible Investment.
To understand further, how RD:IR may be able to help with your Responsible Investment strategy, please contact Alice on +44 20 7492 0549 / firstname.lastname@example.org or Isabel Richardson on +44 20 7492 0513 / email@example.com