Friday 28th October 2016                 Change text size:

Motley Fool: responsible investment is about ‘doing good by doing right’

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Investment website Motley Fool has highlighted the importance and benefits of long-term thinking and considering ethical values when make financial decisions.

In an article, the organisation said, “We advocate investing in companies for the ultra long-term. We seek to fundamentally understand an investment from the ground up, and invest in those companies that offer prospects for sustained success over 20-30 years.”

Motley Fool argues that with an extended horizon, the businesses that investors have invested in can grow over their lifetime. By following this method, investments aren’t only a source of retirement income but an investment of future capital.

As a result of considering the future, investors should think about how their social, ethical and environmental values are reflected, the website added. It also challenged the myth that responsible investment means seeing lower returns.

“It’s about choosing investment where doing right is a competitive advantage”, it said. The usual considerations that take place before investing, such as having a diversified portfolio and assessing risk, are just as important when taking ethical values into account.

Motley Fool explained, “The best way to begin building your socially responsible investment portfolio is simply to add a step to your existing investment process.

“When you find a company that has the financial performance, products, market position and competitive advantage to be a winner, take a little time to investigate its corporate practices.”

Figures show that demand for ethical and sustainable investment is increasing. The Investment Management Association’s (IMA) latest statistics showed a 20% increase in the amount in ethical retail funds in the year to November 2013. Ethical funds now account for 1.2% of the industry and are expected to continue rising.

Meanwhile, a recent survey found that women are more likely to want their ethical values to be reflected in their investments. Some 83% of females polled by One Poll and Abundance Generation would be unhappy if they knew their money supported unethical practices, compared to 66% of men.

Whilst the survey showed that less than 1% of women sought advice from a professional, demand for sustainable advice from a financial adviser has also increased, with 76% of advisers now receiving requests for information on sustainability.

The Motley Fool concluded that responsible investment is about “doing good by doing right”. It added, “It’s about using you investment capital to help shape the future.”

Further reading:

Impax Asset Management: investment opportunities in environmental markets ‘attractive’

83% of British women support ethical investment

Sustainability yearbook highlights responsible investment opportunities

Demand for sustainable, responsible and ethical financial advice rises to 76%

Sustainable investment is about optimisation, not maximisation

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