Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
MANY people find sustainable investing attractive in principle, but are put off by an age-old dilemma: How do I find the investment that’s right for me?
The problem is particularly acute for sustainable investors given the divergence in their objectives. What matters to one investor may mean little to another. As individuals with our own complex set of beliefs, finding an investment that ticks our personal boxes can feel like searching for a needle in a haystack.
That’s why Fidelity has teamed up with SRI Services, the UK’s only independent company devoted entirely to advancing the retail sustainable and responsible investing fund market.
Together we’ve developed Fidelity’s Sustainable Investment Finder, a tool that allows investors to filter the entire universe of sustainable investments by seven different categories.
The idea is to make it easier to whittle down the options and find what’s right for you.
Here’s Fidelity Investment Director, Maike Currie, chatting with SRI Services’ founder, Julia Dreblow, about the Sustainable Investment Finder.
How does the Sustainable Investment Finder work?
The tool is designed to cover the breadth of the sustainable investing landscape. Julia set up SRI Services when she realised that there were lots of sustainably-minded investors who didn’t understand that the funds they were buying were set up to do different things.
Her tool’s classification system recognises that different funds focus on different areas of sustainability. Some focus on environmental issues, others on social, some on governance, others on ethical.
But that’s not the only way sustainable funds work. While many target those specific themes, others take a more strategic approach. They may integrate Environmental, Social and Governance factors (ESG) into their thinking, but not make it the priority. Or, alternatively, some funds go about their business as usual but won’t invest in contentious industries and companies from the offset - arms or tobacco companies, for instance.
What do the categories mean?
Clearly, there are lots of different ways a fund may invest sustainably, meaning it can be hard for investors to identify those which suit their needs.
The SRI categories are meant to make this process as simple as possible. By refining the fund universe according to those funds’ objectives, you can narrow the options in line with your views. The Sustainable Investment Finder uses seven different categories to make sense of this wide universe:
These funds favour companies that offer products and services that encourage greener lifestyles or show sustainability leadership. They typically avoid sectors that don’t help raise environmental and/or social sustainability standards, as well as arms and tobacco companies.
These funds focus on environmental opportunities - from single issues like water, resource management or waste, to broader issues such as biodiversity and climate change.
These funds focus on people issues - from employment and education, to diversity, equality and human rights. They invest in companies with positive social practices.
These funds focus on issues relating to personal values or opinions. They typically invest in companies with more positive environmental and social practices and avoid areas that are widely regarded as more negative - like arms, tobacco and gambling.
These funds focus on faith-based issues. They tend to use negative ethical screening to invest in assets that align with a recognised religion or faith. Other funds may also be suitable for investors of faith, although their core focus is not religious beliefs.
ESG (environmental, social and governance) weighted
These funds will consider ESG or sustainability issues, but aren't wholly directed by them. They tend to favour companies with higher ESG or sustainability standards.
These funds only limit investment in or exclude a small number of companies such as tobacco companies or companies that breach commonly adopted ESG standards. They may aim to encourage companies to improve their standards.
Search for funds using the Sustainable Investment Finder here
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. We've worked with SRI Services to create an easy-to-use categorised list which aims to include investments that have been identified as having sustainable characteristics. This may not show every fund available on our platform that has a sustainable approach and is intended as a tool to help you start looking at options. This list has been based on information from fund managers and research by SRI Services, but is not a replacement for the key investor information document/fund factsheet/suitability policy or strategy information which you should read when deciding if a fund has the sustainability characteristics you're looking for. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
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