From ethical to impact: Getting started in responsible investing

4 min read 31 Mar 21

As regulation of sustainable and responsible investment advice looks more likely, we’re taking advisers on a deep-dive into the world of responsible investing  – with a five-part webinar series explaining what the different disciplines involve and how to build a practical responsible investment proposition.

Despite Brexit-related delay, regulation requiring UK advisers to disclose their policy on responsible investment, and to conduct suitable due diligence, is still on the table.

The EU’s MiFID II sustainable finance disclosure regulation (SFDR), which covers both advisers and product manufacturers, was scheduled to come into force in March. This would have required advice firms to disclose to what extent sustainability criteria is included in their advice, explain to clients what, if any, sustainable investment solutions they offer, and conduct due diligence on the suitability of those investments.

Brexit means the rules will, for now, only apply to UK adviser firms that conduct business on a cross-border basis with the EU. But with the FCA currently in the process of building a regulatory framework to help create what it calls “an understandable, comparable and transparent market for sustainable finance products”[1], UK rules to cover advice in this area still looks highly likely.

Making sense of responsible investing

Yet sustainable and responsible investment is a topic that advisers themselves can currently be forgiven for feeling confused about.  As it races up both investment and political agendas, so the range of labels, practices and approaches it embraces has proliferated.

Ethical, sustainable, ESG and impact investing: all these terms seem to evolve and overlap, but often promise very different things. Additionally, identifying which investment strategies can deliver genuinely positive outcomes – and which might best be described as greenwashing – remains a massive challenge.

The FCA’s work to create greater product transparency and comparability should help in the long run. But as things currently stand, how can advisers make sense of the market, identify client needs and shape an appropriate investment proposition?

Responsible Investing in principle – and in practice

This is a challenge we’re aiming to address in our new Responsible Investing webinar series. Hosted by Julia Dreblow of specialist research consultancy SRI Services, the five-part series includes in-depth presentations and also roundtable discussions with asset managers, discretionary fund managers (DFMs) and advisers with a wealth of practical experience in this space.

You can view the first one-hour session on an Introduction to Responsible Investing here. This offers an introductory overview of the evolution of the Responsible Investing fund market over the past four decades, an explanation of the different approaches involved, regulatory developments that affect advisers, and a broad process for starting to advise clients in this area.

Our next three sessions taking place over the coming months will take a deep-dive look at what’s involved in ethical, sustainable and impact investing respectively. Then in our final session, we’ll provide a practical view on how to embed responsible investing into your centralised investment proposition.

Our responsible investment commitment

As a firm that recognises the importance of working towards a safer, greener and cleaner planet for future generations, Ascentric and M&G are dedicated to helping advice firms build robust sustainable investment propositions.

Commenting on the series Julia Dreblow says: “I’m delighted Ascentric has seen the need to help upskill intermediaries in this area. Fund strategies are rightly diverse as client aims vary. But this can make it hard to navigate away from greenwash-related risks. Our sessions will help advisers to build a solid base of understanding of different fund strategies. They can then build on this no matter what direction regulation takes.”

We hope this webinar series provides valuable insight for your business. Tell us what you think about the series and what other responsible investment topics and issues you’d like us to explore by emailing us at marketing@ascentric.co.uk

Note: Each session in the series can count towards 60 mins of CPD.