ESG assets are on the rise, with global sustainable investment expected to surpass $50 trillion by 2025.
Table of Contents
- What is Sustainable Investing
- Why ESG is Gaining Traction
- What to Consider When Building A Sustainable Portfolio
- ESG vs Sustainable Investing
In a world increasingly defined by climate commitments, social responsibility, and ethical corporate governance, sustainable investing is no longer a niche concept. Investors across the UK are actively seeking ways to align their portfolios with their values while still achieving long-term financial growth. This approach, often framed under the broader terms of ESG (Environmental, Social and Governance) or ethical investing, offers individuals the opportunity to drive positive change through the way they invest.
Image: PEXELS/ Lejla Hatipovic
What is Sustainable Investing?
Sustainable investing involves building a portfolio that incorporates environmental, social, and governance factors into the investment decision-making process. Rather than focusing solely on financial return, sustainable investors also evaluate the impact a company has on society and the environment.
There are several key strategies:
- Exclusionary Screening:
Avoiding companies or sectors that conflict with your values (e.g., fossil fuels, tobacco, weapons).
- ESG Integration:
Incorporating ESG risks and opportunities into traditional financial analysis.
- Thematic Investing:
Targeting specific trends such as clean energy, sustainable agriculture, or water conservation.
- Impact Investing:
Seeking to generate measurable positive social or environmental impact alongside a financial return.
Why ESG is Gaining Traction
ESG assets are on the rise, with global sustainable investment expected to surpass $50 trillion by 2025, according to Bloomberg Intelligence. In the UK, the FCA has introduced sustainable investment labels to help investors distinguish between genuine ESG funds and greenwashed offerings. As demand grows, wealth managers are under pressure to offer more transparency and demonstrate that ESG considerations are deeply integrated into their processes.
What to Consider When Building a Sustainable Portfolio
Clarity on Your Values: Let’s Make a Plan says to decide what sustainability means to you. Is your priority environmental impact, social justice, or ethical governance? This helps narrow down fund choices and investment strategies.
Know What You Own: Don’t rely solely on a fund’s name. MoneyWise suggests making sure to check the underlying holdings as some ESG-labelled funds may still include oil majors or fast fashion brands if they score highly on governance.
Diversification Matters: Sustainable Review advises that ESG portfolios should still be diversified across sectors, geographies, and asset classes to reduce risk. Many sustainable funds now offer exposure to global equities, bonds, and alternatives.
Use a Professional: Partnering with a wealth manager experienced in sustainable investing can help you filter out greenwashing and find opportunities that match your ethics and risk profile. Compare Wealth Managers works with a range of firms offering ESG expertise, ensuring your investments align with your morals.
Image: PEXELS/Min An
ESG vs. Sustainable Investing
While often used interchangeably, ESG investing and sustainable investing are not always the same. ESG investing primarily focuses on evaluating companies based on environmental, social, and governance criteria to mitigate risk and enhance long-term financial performance. It seeks to integrate these factors into traditional investment analysis to identify companies with sustainable business models and practices.
On the other hand, sustainable investing goes a step further by actively seeking out investments that promote positive social and environmental impact. It emphasises proactive engagement with companies to drive positive change and support sustainable development goals.
How Our Partners Approach ESG
At Compare Wealth Managers we are proudly partnered with top wealth management firms, here are how some of our partners approach sustainability when it comes to investing:
- Saltus takes a pragmatic view, combining ESG screening with financial discipline to ensure that ethical principles can go hand in hand with performance.
- LGT Wealth Management integrates sustainability into its core investment philosophy and offers dedicated ESG portfolios.
- Rothschild & Co focuses on stewardship and long-term value creation, encouraging companies to adopt best-in-class ESG practices.
- Quilter Cheviot provides customised ESG overlays for clients, helping align portfolios with personal values.
Sustainable investing is about creating a future that is both financially secure and socially responsible. It allows investors to grow their wealth while contributing to a greener, fairer world. With more tools and guidance available than ever before, there’s never been a better time to take a sustainable approach to wealth building.
If you’re ready to explore ESG opportunities that reflect your values and goals, you start finding wealth managers today with Compare Wealth Managers. Just click the orange “Start comparing” button to begin now or check out our 5* reviews from Trustpilot.
