Responsible investments for your clients

Helping to meet your clients’ financial and environmental, social and governance (ESG) goals

With clients’ ESG preferences set to be a mandatory part of the suitability process, it’s a good time to find out more about responsible investment.

It’s an area of investing that’s changing. Different approaches and funds are now available to your clients.

These include ESG integration – something we’re hearing more about. This is an overarching process that can be used for all funds, where investment managers look at a company’s ESG behaviours, alongside other financial information, to help spot risks and opportunities.

There are also individual funds aiming to achieve specific ethical, social or environmental outcomes alongside a positive financial return.

Responsible investment adds to traditional investment analysis and fund choices. It also opens up a topical and emotive world of opportunity to engage clients in investments.

Here we explain the different approaches used to invest responsibly and the choice this gives to your clients. We also look at the growing interest in these areas from regulators, consumers and investment managers.

You can find out more using the links below:

What’s driving growing interest in investing responsibly

A summary of the different approaches to responsible investment

Find out how ESG integration can help manage risk

Funds that use responsible investment screens and themes

How stewardship helps influence positive change

Access responsible investment funds on Wrap and Elevate


A helpful two-page guide you can use with clients

Download our summary ‘Responsible investment – the basics’ which covers the approaches used to invest responsibly.


Remember, the value of your clients’ investments could go down as well as up and they may get back less than was paid in.

Growing interest in investing responsibly

From the media, to the investment industry, to regulators, there’s a shift in thinking around investing responsibly:

  • Many of us are making more responsible and sustainable choices in all areas of our lives
  • Investment managers are increasingly using ESG analysis to help determine risk and return
  • Regulators are encouraging advisers and pension trustees to take people’s ESG and ethical preferences into account when it comes to investments

This increasing awareness may present an opportunity to engage your clients with their investments.

More of us are choosing sustainable options in all areas of our lives

In the UK, there’s growth in everything from green energy to ethical clothing, food and drink. This is also feeding into how we think about our investments. Research shows more people are interested in investing responsibly, while the Financial Conduct Authority (FCA) has also asked advisers to respond to the increasing demand for sustainable and green investments.

ESG analysis can help identify risk and return

Investment managers are increasingly looking at how responsible a company is, as this can affect its future performance. Evidence suggests that companies that take ESG factors seriously can better manage their own business risks and provide higher dividends. You can find out more about how investment managers use ESG analysis here.

Remember, the value of your clients’ investments could go down as well as up and they may get back less than was paid in.

Regulators are taking ESG seriously too

Considering clients’ preferences on ESG topics is set to be a mandatory part of the suitability process. This new guidance is based on European Commission-proposed amendments to MiFID II and the Insurance Distribution Directive (IDD).

Meanwhile pension trustees are already working to meet new ESG requirements outlined by the Department for Work and Pensions. Trustees must disclose the risks of their investments, including ESG factors such as climate change, and their policies around stewardship of investments. They also need to show the extent to which they take members’ views into account when they plan investments.

An opportunity to engage your clients with their investments

Growing awareness of responsible investment is good news for advisers. Research shows that it can be a great way to engage more of us in our investments. So with more clarity and communication about its approaches, it will be easier to position with your clients.

Issues like human rights, climate change and environmental concerns are easier to relate to than many investment concepts. So some clients may engage more easily with investments that combine aiming to achieve financial returns alongside encouraging corporate responsibility or targeting specific social or environmental outcomes.

What is responsible investment?

As the world of responsible investment has grown so too have the words used to describe it – think ESG, sustainable, ethical, impact, green and socially responsible investment (SRI). But looking at it simply, responsible investment is when investment managers use one, or a combination of different approaches to:

  • decide what to invest in
  • analyse ESG risks and opportunities a company may face, to help better manage risk and to help their funds achieve sustainable long-term returns (although the value of all investments can go down as well as up)
  • offer funds aiming to achieve specific ethical, environmental or social goals
  • use their role as a steward of investments to encourage better ESG conduct and behaviours within companies

The different approaches

As defined by the United-Nations backed Principles for Responsible Investment (the PRI), the different approaches can be split into two broad categories: ESG incorporation and stewardship. Here’s a summary of the PRI categories, using our own words to help describe each one.

ESG incorporation

Investment managers can use a combination of three broad approaches to include ESG in both their overarching investment processes, and in the design of their individual funds.

ESG integration



A process used to analyse a company’s approach to ESG to help spot opportunities and manage risks. Funds that exclude/include investments based on ethics and values. Funds aiming to achieve a financial return alongside a specific environmental or social outcome.
Can be applied across all funds Includes ethical funds Includes impact funds


As steward of an investment, an investment manager can influence positive ESG change. They do this using engagement and voting rights.

Active engagement

Proxy voting

Regularly talking to companies they invest in to understand their ESG activities and risks, and to encourage better conduct in these areas. Using voting rights on behalf of investors to encourage good management of matters such as governance, tax practices and climate change.

How ESG integration can help manage risk

Find out more >

Funds that use responsible investment screens and themes

Find out more >

How stewardship helps influence positive change

Find out more >

What is PRI?

Find out more >