Responsible Investment

With issues such as climate change and deepening social injustices crossing into the sphere of personal finance, investors increasingly want to know where their money is going and what good it is doing. As such, there has been a seismic shift towards Responsible Investment (RI).

RI is where managers actively and intentionally seek to do good, avoid doing harm and lead change by investing in companies which are helping to meet the world’s most pressing challenges, whilst avoiding harm or seeking to improve those which perpetuate our problems.

At Square Mile, we see RI as an umbrella term from which stems a spectrum of differing investment approaches. These range from those which exclude certain sectors to those that are focused on positive and measurable impact to society and/or the environment.

Responsible Research

Square Mile and 3D Investing share a common aim; to help advisers identify the right fund or fund manager to help meet their client’s aspirations, liabilities and, in the case of RI, convictions.

As with all investments, we recognise that our clients have broad and differing needs within the RI space, with some seeking guidance or opinion and others requiring independent and objective verification of a fund’s ability to deliver on its objectives. In recognition of this, Square Mile and 3D Investing have maintained their distinct through complementary approaches to fund research.

It should be noted that, although complementary, these are distinct evaluations and are totally independent.

SQUARE MILE RESPONSIBLE RATINGS

The Square Mile Responsible ratings seek to help advisers to identify RI funds that we believe have the best prospects of delivering on both their financial and responsible objectives. This means for a fund to achieve a Responsible rating it must have a responsible outcome within its objective.

Square Mile Responsible Rated Funds

3D RESPONSIBLE RATINGS

The 3D ratings are awarded to RI funds which have been assessed against the 3D framework of 'do good', 'avoid doing harm', and lead change'.

This enables funds to be compared in a systematic and objective manner by way of consistent profiling.

3D Investing Rated Funds

RESPONSIBLE INVESTMENT RATINGS GUIDE

Responsible Investor types

There are different ways of approaching RI, with a whole spectrum of investments. We have identified four pillars to RI that we believe helps to ascertain the type of investor your client may be. These are not mutually exclusive, but it’s helpful to identify which approach best resonates with you.

The Square Mile Responsible and 3D Ratings will assess the RI funds through our different methods of RI analysis. However, both ratings will identify which of the following four broad RI categories the fund sits within. These categories (ethical exclusions, responsible practices, sustainable solutions, impact investing), are designed to help advisers identify funds that we believe have the best prospects of meeting their financial and responsible objectives.

Responsible Investment

Ethical Exclusions

An ethical exclusions fund manager seeks to avoids industries and company practices that cause harm to people or the planet.

Responsible Practices

A responsible practices fund manager considers the operational practices of the companies in which they invest and supports 'best practice' in their respective industries, as well as encouraging them to improve their environmental and social performance.

Sustainable Solutions

A sustainable solutions fund manager seeks to invest in companies that are providing solutions to social and environmental challenges through their core products and services in the belief that this will realise long-term financial benefits.

Impact Investing

An impact fund will have clear intent to make a wider positive social or environmental impact. The fund will be substantiated by investment in companies providing solutions to social and environmental challenges through their core products and services, with evidence provided of the social and environmental impact.

SUSTAINABLE PORTFOLIOS

Focussing on funds which explicitly aim to reduce the negative impact of their investments in society and the environment, as well as offer attractive returns.
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IMPACT PORTFOLIOS

Alongside the financial goal, these portfolios aim to deliver a demonstrable positive impact in accordance with the 3D Investing framework – to do good, avoid harm and lead change.

By analysing the underlying holdings, we aim to determine the proportion of your client’s money being allocated to different social and environmental themes.
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