A Guide to ESG Investing

A Guide to ESG Investing

We all want to grow our wealth sustainably and with minimal risk, but these days other factors are having a significant impact on investment decisions too. In fact, the ESG Investment market is expected to double in 2021, with 77% of 18 to 55 year olds saying ESG factors form an important part of their decision (FT Adviser).

ESG Investments are assessed using a rating system based on the company’s performance in three key areas. These are environment, social, and governance, and they form a framework through which to analyse the long term sustainability of a fund or business. It’s good to be ethical, and it’s good to grow your money. With ESG Investing, you can do both.

Hansford Bell are a team of Chartered Financial Planners based in Tavistock. Our wealth management experts work closely with our clients to analyse the market to find the right opportunities. We tailor our approach to your goals, your attitude to risk, and your ethical stance.

In this article, we explain what ESG Investing is and why you might want to consider using this framework when managing your wealth.

What is ESG Investing?

ESG Investing is a hot topic in the financial industry. Essentially, it is a way of investing sustainably by using specific environmental, social, and governance criteria to systematically screen companies. This method rewards companies who have good track records for social responsibility and a long term vision for the future.

The name ESG was coined in 2004 in the Who Cares Wins initiative, created by the UN in collaboration with the Swiss government and endorsed by 23 financial institutions. The report detailed a range of recommendations to better integrate environmental, social, and governance factors into analysis, asset management, and securities brokerage. It advised that people should consider ESG issues not only to manage risk, but also as a competitive advantage.

In contrast to other types of sustainable investing, businesses from all parts of the stock market can be considered, as long as they score well within the criteria. In this way, ESG allows people to align their portfolio with their beliefs and have a positive impact on the world, without losing out on high returns. And, when it comes to growing our wealth and building a safety net for retirement, high returns are ultimately what we’re all after!

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ESG Factors.


For everyone, the environmental crisis is a pressing concern, and increasingly investors are demanding that the companies they give money to are taking steps to mitigate their impact. Everything from waste management to water consumption, energy efficiency, and pollution can affect the score. This factor helps people choose businesses to invest in that are actively mitigating their impact and trying to make the world a better place.


The social ESG factor considers how a company relates to and supports its employees, clients, and communities. This might cover internal things like data security and health and safety policies, alongside wider societal impact in terms of human rights, diversity, and gender equality.


Governance is all about the company architecture and its operational standards. This factor looks at things like board structure, company ownership, ethics and culture, and the transparency of its financial reporting.

How is ESG Score Calculated?

ESG scores are calculated by various independent companies using different methodologies. Generally, they use a 100 point scale, with a high score indicating a better performance. There is no one authority nor is there one way of acquiring and measuring data. This can make it difficult to determine which funds and investments are genuinely having a positive impact, and which are just ‘impact washing’.

More than that, the score is measured based on self-reported, partial data and relies on the company’s transparency and disclosure. For that reason, it’s a good idea to get expert financial advice when considering which sustainable investments to add to your portfolio.

At Hansford Bell, we’re good at sifting through the data and the marketing lingo to find the companies having a real impact. Our team of wealth management experts can sort through ESG scores and sustainability indices on your behalf and provide a series of recommendations tailored to your beliefs, finances, and attitude to risk.

Benefits of ESG Investing.

ESG Investing is becoming more and more popular because people are starting to realise that companies with non-financial indicators of success perform better on the market too. That’s why a good ESG tailored portfolio can balance your financial returns with sustainable impact. Here are some of the key benefits.

Positive Impact

The concept of ‘impact investing’ has been around a while. In the USA during the 18th Century, Methodist groups refused to support companies that promoted tobacco, liquor, or gambling in accordance with their beliefs. And the following century, Quakers forbid their members from investing in slavery and war (source). But, on the whole, the narrative around investing has focused only on achieving high financial returns.

A growing awareness for ESG Investing is changing this, with investors interrogating how their wealth is impacting the planet. The benefits of ESG Investing are much broader than one person’s financial prosperity. ESG Investing allows you to grow your portfolio and have a positive impact on the planet at the same time. It aligns your personal beliefs and goals with the way you manage your money – something our financial life planners are rather passionate about!

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Greater Resilience

The COVID-19 pandemic demonstrated the financial benefits of socially responsible investing. Companies with a strong track record of fulfilling ESG criteria fared better throughout the uncertainty, revealing lower volatility and greater resilience. This is because organisations with high ESG scores generally have more robust company structures and good environmental initiatives in place that mean they are less affected by worldwide fluctuations – operating sustainably in more ways than one!

Long Term Market Value

78% of fund managers and analysts felt that managing social and environmental risk had a positive impact on a company’s market value in the long term. There are various reasons for this. Operating sustainably can lower a company’s costs and streamline processes. It can also boost brand awareness and encourage customer and shareholder satisfaction. ESG factors also mitigate many financial risks faced by companies, because they have strategies in place for environmental, social, and governance-based sustainability. All of this and more contributes to making the business more of a valuable prospect – financially and otherwise – for all sorts of investors.

Overall Management Quality

ESG is a good indicator of a company’s overall management quality, because it often points to high levels of transparency as well as strong leadership. Driving environmental and social initiatives requires a robust management team led by a long term vision, and this can be a key determinant in a business’ lasting success. Good for you, good for the planet, and good for the business – what’s not to love?

Encourages Sustainability

25% of UK investors reportedly plan to make ESG investments by 2025. With ESG Investing a growing trend, more and more companies are working to meet the criteria and reporting on their sustainability practices. Businesses that wouldn’t necessarily act sustainability out of the goodness of their own hearts, may be convinced to innovate and adapt to a changing investment landscape by following the money. If investors demand it, companies will have no choice but to provide!

ESG Investing with South West Financial Planners.

Hansford Bell aren’t your average team of financial specialists. We take the time to get to know our clients and help them realise what they want from their life, whether that’s a personal ambition or a financial goal.

At Hansford Bell, we’re passionate about our community and ensuring we continue to have a positive impact on the world around us. If you’re on the same page and want to make sure you’re directing your money towards ethical businesses and funds, we can identify the right opportunities for you. Investing in high ESG scoring companies means you are helping to create a better world, and growing your wealth at the same time. Win, win!

Want to chat about ESG Investing? Get in touch today and we’ll arrange a free initial consultation.

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