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Windmills an ethical investment

Ethical & Sustainable Investing

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Ethical & Sustainable Investing

Let PAF Hereford guide you to ethical and sustainable investments

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Let PAF Hereford guide you to ethical and sustainable investments

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Investing in Ethical & Sustainable Portfolios

Investing in this way regularly involves active engagement as the fund manager encourages the companies that they invest in to adopt or improve social, governance and environmental practices and be conscious of their impact on the world.

Whilst negative screening has been the foundation for most ethical based investments, this additional level of positive screening that considers Environmental, social and Governance (ESG) factors, is less commonly known or adopted. Considerations are given to how an organisation approaches climate change, is it attuned to social diversity and human rights, and does it build and review its management structure in a transparent, honest manner. By blending both positive and negative screening, you can be assured that your investment solution meets your Ethical & Sustainable requirements.

WINDMILL
WINDMILL

There are three main types of ethical fund:

Positive screening – aims to invest in companies with a commitment to responsible business practices, or those who offer products and services that have a positive impact on the environment.

Negative screening – avoiding companies that do not meet the fund’s ethical standards. Industries most commonly excluded include alcohol, tobacco, gambling, pornography, animal testing for cosmetic purposes, genetic engineering, intensive farming, arms/military engagement and nuclear power.

Alternative – Other funds will consider companies that specialise in renewable energy and other technologies that can help to build a better future for our environment; or support charities and other socially responsible institutions.

company screening meeting

We are able to provide Ethical and Sustainable Bespoke portfolios aligned to charities, individuals and companies individual views and preferences, please contact us for more details. The value of your investment can fall as well as rise and is not guaranteed.

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Why Invest Sustainably?

Sustainability has become an important value driver that cuts across all sectors, industries and geographies. In the wake of the 2008 financial crisis, the global community became aware of the systematic importance of conduct. Combined with the increasingly evident impact of global warming, Environmental, Social and Governance (ESG) factors have come to the fore. The growing emphasis on higher resource efficiency and production, environmental preservation and improvement, as well as social challenges, such as hunger and inequality, has resulted in a high level of growth within segments of public and private markets. For example, climate change has sparked a shift in energy markets away from traditional fossil fuel sources to renewable sources, which are becoming cheaper and scalable. Sustainability provides an excellent additional risk management tool, which requires an integrated and long-term investment view.

What is the sustainable investment process?

The funds selected for the sustainable model portfolios go through a range of screening processes. LGT Vestra aims to exclude funds investing in companies whose activities they deem to be controversial. They seek to invest in those that mitigate their risk by having a strong focus on the environment, society and good governance, in alignment with the UN Sustainable Development Goals (UN SDGs). The funds selected for the portfolio will also focus on selecting companies with high operational sustainability (i.e. good business practices), and that are solving environmental and social challenges.

We work with our investment partners LGT Vestra who offer 5 Sustainable Model Portfolios'
Sustainable Model Portfolio Service

The LGT Vestra Sustainable Model Portfolio Service aims to hold between 20 and 25 funds, which they aim to comprise the “best of breed”. All funds are independently researched and approved for use within the portfolios.

The range of portfolios
The Sustainable MPS is composed of five risk-rated portfolios, which have three targets assigned to each. These three targets are volatility, annualised return and maximum loss.

How are the model portfolios constructed?
The composition of the sustainable model portfolios is decided by the LGT Vestra Sustainable Model Portfolio Committee, which meets at least once a month to select investments that best meet the objectives, volatility bands, asset allocation and target returns for each portfolio. Any investment decisions are based on the output from LGT Vestra’s Investment Committee, which is a separate committee comprising of their most experienced portfolio managers and asset class specialists. The role of these individuals is to set the overall investment strategy and asset allocation for the firm across all the principle asset classes. Decisions made by LGT Vestra’s Investment Committee encompasses information provided by sub-committees of specialists who are dedicated to researching specific asset classes.

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Potential Risks

The overall value of the investments will depend on the investment performance of the model portfolios and their underlying fund holdings, which will vary. Investment prices can go down as well as up and past performance is not necessarily a guide to future performance. Investors may receive back less than originally invested. If the overall charges increase on the model portfolios, it will be necessary to achieve even higher levels of growth in order to provide greater returns on your investment. 

The underlying capital value of your investment in a model portfolio could be reduced in the future, especially if withdrawals and the charges are higher than any growth. 

Over time, if income is received, the level of your income could be eroded by inflation.

The UN SDGs form a vital framework for both individual countries and our wider global community to ensure capital is channelled toward the areas that need it most. The UN SDGs alone do not form a robust investment framework; however, they inspire a range of investment themes that incorporate many high growth sustainable trends. The Sustainable Model Portfolios encompass three key sustainable investment strategies: responsible, sustainable and impactful

 

 

The ultimate goal of the Sustainable Model Portfolio Service is to generate strong and consistent investment returns for clients, whilst supporting a sustainable philosophy. The portfolios will aim to achieve this by investing in a diversified range of funds which incorporate themes such as renewable energy, financial inclusion, education, social housing, climate change action, sustainable waste management and renewable material production. 

In 2015, the United Nations (UN) created the Agenda for Sustainable Development 2030. Through the Agenda, the UN and its 193 member states build on decades of a shared vision to create a sustainable world and a better future for all. At the core of the Agenda are the 17 UN Sustainable Development Goals (UN SDGs). The Goals aim to make ambitious progress and combat a range of issues, including health, education, climate change, poverty, gender equality, sanitation, energy, social justice and the environment.

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