Historically, the primary goal of investing has been simply to generate returns, often without much consideration for the industries involved. This meant investments could end up in sectors like fossil fuels, alcohol, gambling, or even weapons—areas that many now view as misaligned with their personal values.
Today, with ESG (Environmental, Social, and Governance) and ethical investing gaining traction, more investors are asking themselves: Do I really want my money supporting industries I don’t believe in? It’s a valid and increasingly common question.
There was once a perception that ethical investing meant sacrificing performance and growth, however, this is not necessarily the case any longer. Regulatory changes and increased transparency in ESG markets have made it easier to understand where your money is going. Whether you’re avoiding companies that test on animals, supporting medical innovation, or steering clear of industries like alcohol or gambling, you can now tailor your investments to reflect what matters most to you.
ESG and ethical fund management have seen significant growth since around 2017, with a sharp rise through 2021—the peak year for global sustainable fund investments.
Investor interest in ESG and ethical investing is driven by several key factors:
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- Values alignment (e.g. environmental protection, social justice, ethical governance)
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- Transparency and accountability
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- Demographic shifts, particularly among younger investors
Recent regulatory developments have enhanced transparency, and technological advances have improved ESG performance tracking—making it easier to align portfolios with both ethical principles and long-term financial goals.
Some investors choose to exclude industries like fossil fuels, tobacco, or weapons, while others actively seek companies that promote sustainability, human rights, and responsible governance.
There is a difference between ‘ethical’ and ‘sustainable’ investing. The former is generally driven by negative screening (excluding certain sectors) and the latter by positive screening (wanting to include areas which are a positive influence on the world).
Although we have seen in certain market conditions, the ESG sector has generally been competitive, and outperformed traditional investments, that is not always the case, and if investing ‘ethically’, you do need to be aware that your funds will be going on a slightly different journey. Sometimes, returns can differ meaningfully, and although this can be very beneficial (superior returns during Covid, for example), they could be more volatile and lag in certain market conditions. Many investors do, however, see the forward-thinking nature of ESG funds, as being very attractive for a long-term strategy.
At Lovewell Blake Financial Planning, our investment advice is tailored to you personally. This means that if you wish to invest your monies ethically or sustainably, we can an investment strategy which suits your specific needs.
Speaking to one of our financial advisers can help you to assess your current investments, and ensure that they are working towards your objectives, in line with your attitude to risk, and thoughts on sustainability, if that is important to you.