Sustainable financial advice: IFA Tanya Pein on investors having a ‘moral compass’
Monday, March 3rd, 2014 By
Tanya Pein, investment specialist for charities and private clients at In2 Consulting, gives advice to clients on sustainable, responsible and ethical investment.
She is also co-chair of the Ethical Investment Association, and tells Blue & Green Tomorrow that the vast majority of people are pleased and interested when such options are offered to them.
How did you get into sustainable, responsible and ethical financial advice as opposed to financial advice more generally?
I co-founded what I’m delighted to say is now the largest charity in Europe supporting social entrepreneurs, and I came into financial advice through charity investment. So it was natural to me to integrate values into investment, and into what I personally was doing as an independent financial adviser.
Most people have a vision of a better world, and I could clearly see that investment was a way of helping them realising their vision. It’s always enjoyable having those conversations with clients, and to offer sustainable and responsible investment (SRI) advice.
Tell us about your firm, its history, team numbers and what you see as its expertise.
My firm is called In2 Consulting and has been advising individuals, companies and charities for over 20 years. It has eight advisers and plenty of specialist expertise alongside the ethical investment advice that I give. This includes cashflow planning, holistic financial planning, private equity, pension consolidation, mortgages and employee benefits. We’re based in the City of London, but with clients nationwide.
Why do you think people should consider investing sustainably, responsibly and ethically?
Here’s a better question: “Why does it feel right to invest without considering the environmental damage my investments might make, or any human rights abuse or poor labour conditions that might underpin profits?”
This is a better question because everyone has a moral compass, and the idea of setting it aside when it comes to investment is relatively new. It doesn’t have to be that way, and the shift from that approach is gathering speed.
If you prefer the original question, here’s a quantitative answer: there is rigorous and recent academic research that shows that active engagement by fund managers with companies on their environmental, social and governance (ESG) standards boosts the investment return. That’s a very compelling finding – investors, take note.
Is there a compromise to be made between getting a return on investment and ‘doing the right thing’?
Of course – and the slave trade was extremely profitable, as an example. But that question is in the same faulty paradigm as the previous one: that it’s reasonable to invest without considering the impact of the investments.
It isn’t reasonable, and there is much evidence is that when people hear about poor practices that they certainly do care. For example, since the recent deaths in Bangladeshi clothes factories, there has been strong consumer pressure on UK high street retailers to insist on higher supplier standards.
Are there any sustainable, responsible and ethical funds that people should be looking into and talking to you about?
Yes, there’s plenty of funds, which have strong financial returns, have acceptable levels of risk and operate with relatively low management charges. I’ll be happy to give further details if readers get in touch.
What, if anything, is stopping sustainable, responsible and ethical investment from taking off in the UK?
Lack of publicity. Few investors ask specifically for these types of investments – and in my experience, the vast majority are pleased and interested when it is offered.
What trends have you noticed in sustainable, responsible and ethical investment in the past year?
A greater willingness of very senior investment strategists to integrate ESG factors into their views of the macroeconomy and the investment world. That steer from the top is trickling down through the major investment providers, with the result that SRI is becoming more mainstream – all to the good.
If people do not invest sustainably, responsibly and ethically what is the biggest consequence for them?
On the investment return side: lower returns in the medium and long-term. On the personal side: maybe fury from their children, once they realise how their parents invested, and what kind of inheritance has been delivered to their generation as a whole.
If you were stuck on a desert island, which famous person would you like to be stuck with and why?
Either a philosopher – we could have endless interesting conversations. Or a musician – we could sing and dance the hours away. Or a really strong swimmer – I could improve my speed and stamina, and then we’d get back to our loved ones. Those would be the practical considerations, and I wouldn’t mind if the person was famous or not.
What’s your prediction for the next 10 years of sustainable, responsible and ethical investment?
The great leap forward in awareness and practical action that we’ve all being waiting for. I would hope that it will come for positive reasons – people understanding why it makes sense from an investment and from an inter-generational equity point of view to change the way investments are made. But I suspect that environmental damage caused by an increasingly unstable climate, and various other negatives will unfortunately play a major role. Pessimism of the intellect, but optimism of the will, as the saying goes!
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