An Introduction To Responsible Investment *
An Introduction To Responsible Investment provides information on the most important aspects of responsible investment for sustainability practitioners. It is only available to Business in the Community (BITC) members.
* Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice.
What is ‘responsible investment’?
The Principles for Responsible Investment (PRI) defines responsible investment as ‘a strategy and practice to incorporate ESG (environmental, social and governance) factors in investment decisions and active ownership’1.
Over the last decade, responsible investment has become a central topic in the investment world, with more investors asking questions about where their money is going. With media attention on the climate emergency, the plastic waste crisis and the COVID-19 pandemic, the appetite for sustainable investments has been growing at an increasing pace. With this increased focus on sustainability, investors are looking more closely at the ESG performance of their portfolios. Consequently, companies are thinking more about how they tell their sustainability stories to investors and are increasingly turning to their sustainability teams to help them communicate. This Introduction To Responsible Investment factsheet is designed to enhance sustainability professionals’ understanding of the investment world and enable them to better communicate with their own investor relations team, or with other external stakeholders.
During the COVID-19 pandemic the amount of money invested in ESG funds increased dramatically2. These funds are outperforming traditional investments over ten years, further accelerating the appetite for sustainable investment3. Historically, there has been resistance to integrating ESG into investment decision-making, on the basis it went against fiduciary duty. However, there is now a growing body of evidence that on the contrary, this is of critical importance4. This is encouraging for those who see responsible investment as a key lever to accelerate the pace and scale of business action to meet the United Nations (UN) Global Goals, also known as the Sustainable Development Goals (SDGs) and Build Back Responsibly as we recover from the COVID-19 pandemic.
Business in the Community and the Global Goals
Business in the Community (BITC) is working with business to accelerate the pace and scale of action to deliver against the Global Goals.
We inspire, engage and challenge businesses to be purpose-driven, taking practical action and mobilising their collective strength to deliver against the Global Goals. Rather than philanthropy, we are focused on how companies can bring about structural and lasting social, environmental and economic changes through running their businesses responsibly, for example through responsible investments.
- Principles for Responsible Investment (n.d.) What is responsible investment?
- Hortense Bioy (2021), Sustainable funds’ record-breaking year, Morningstar, 8 February
- Financial Times (2020), ESG funds outperform the wider market over 10 years
- UN Environment Programme (2019), An updated look at fiduciary duty in the 21st Century: incorporation of ESG issues required and increasingly clarified in regulation