{"id":19906,"date":"2025-02-04T13:13:00","date_gmt":"2025-02-04T11:13:00","guid":{"rendered":"https:\/\/moneyhub.ee\/?p=19906"},"modified":"2025-06-20T07:19:15","modified_gmt":"2025-06-20T05:19:15","slug":"responsible-investing","status":"publish","type":"post","link":"https:\/\/moneyhub.ee\/en\/useful\/articles\/responsible-investing\/","title":{"rendered":"Beginners guide to responsible investing"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"19906\" class=\"elementor elementor-19906\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-5d7efb58 e-flex e-con-boxed e-con e-parent\" data-id=\"5d7efb58\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-32d40bf6 elementor-widget elementor-widget-shortcode\" data-id=\"32d40bf6\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\"><nav aria-label=\"breadcrumbs\" class=\"rank-math-breadcrumb\"><p><\/p><\/nav><\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-1e4750ba e-flex e-con-boxed e-con e-parent\" data-id=\"1e4750ba\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t<div class=\"elementor-element elementor-element-a047e75 ddddf e-flex e-con-boxed e-con e-child\" data-id=\"a047e75\" data-element_type=\"container\" data-e-type=\"container\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-20c9d99a elementor-widget elementor-widget-heading\" data-id=\"20c9d99a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">If you want to ensure your investing footprint is as small as possible, here's how to do responsible investing.<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-18b94166 e-flex e-con-boxed e-con e-parent\" data-id=\"18b94166\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-13e8adb2 elementor-widget elementor-widget-image\" data-id=\"13e8adb2\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"2240\" height=\"1260\" src=\"https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing.png\" class=\"attachment-full size-full wp-image-15657\" alt=\"\u043e\u0442\u0432\u0435\u0442\u0441\u0442\u0432\u0435\u043d\u043d\u043e\u0435 \u0438\u043d\u0432\u0435\u0441\u0442\u0438\u0440\u043e\u0432\u0430\u043d\u0438\u0435\" srcset=\"https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing.png 2240w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-300x169.png 300w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-1024x576.png 1024w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-768x432.png 768w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-1536x864.png 1536w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-2048x1152.png 2048w\" sizes=\"(max-width: 2240px) 100vw, 2240px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-19d502c4 e-flex e-con-boxed e-con e-parent\" data-id=\"19d502c4\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-175f64b5 elementor-widget elementor-widget-text-editor\" data-id=\"175f64b5\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h1><b>Beginners guide to responsible investing<\/b><\/h1><h1>\u00a0<\/h1><p><span style=\"font-weight: 400;\">Did you know that your money gives you a say in influencing companies on important issues, such as how they consider Climate Change?<\/span><\/p><p><span style=\"font-weight: 400;\">You might be thinking that sounds a little too good to be true.<\/span><\/p><p><span style=\"font-weight: 400;\">But it isn\u2019t.<\/span><\/p><p><span style=\"font-weight: 400;\">When you invest, particularly in funds, you can feel removed from where your money ends up. You might have a rough or even a good idea of what you\u2019re investing in, but it\u2019s really easy to forget that your money is put into actual companies.<\/span><\/p><p><span style=\"font-weight: 400;\">Which means your money funds the outputs and outcomes of those companies.<\/span><\/p><p><span style=\"font-weight: 400;\">Here\u2019s how your money can make a difference by integrating sustainable practices into the development of business strategies.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">But first, the fine print.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">This article can give helpful tips, but it isn\u2019t personal advice.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">When you invest, there\u2019s a risk that you could get back less than you put in. That\u2019s because investments can fall as well as rise. If you\u2019re unsure if investing is right, you can speak to an independent financial adviser.<\/span><\/p><h1>\u00a0<\/h1><h2><b>Where does your money go when it&#8217;s invested?<\/b><\/h2><p><span style=\"font-weight: 400;\">There are many different ways to invest. Some of the most common ones are bonds and shares.<\/span><\/p><p><span style=\"font-weight: 400;\">Investing in bonds means you lend money to a company (or even the government \u2013 government bonds are sometimes called \u2018Gilts\u2019) for a particular time. As a \u2018thanks for lending us money\u2019, investors receive interest payments and the return of the money initially loaned at the end of an agreed period.<\/span><\/p><p><span style=\"font-weight: 400;\">When you invest in shares, either in individual companies or funds, you buy tiny pieces of companies.<\/span><\/p><p><span style=\"font-weight: 400;\">It might be small, but it can be mighty because you become a shareholder.<\/span><\/p><p><span style=\"font-weight: 400;\">Shareholders are important, as they can vote on essential aspects of the business.<\/span><\/p><p><span style=\"font-weight: 400;\">These include a company\u2019s climate change policy (environmental factors) or the composition of the board of directors (governance factors). Larger shareholders do have more influence, but that doesn\u2019t mean that smaller shareholders can\u2019t make a difference.<\/span><\/p><p><span style=\"font-weight: 400;\">So, remember that when you own parts of companies, your money enables those companies to make decisions.<\/span><\/p><p><span style=\"font-weight: 400;\">Holding company bonds and shares and voting allows investors to help encourage and promote good behaviours. This happens by engaging with companies to enable them to make positive changes. Additionally, the services provided by these companies can promote sustainability and drive innovation, addressing specific industry challenges and contributing to the global landscape.<\/span><\/p><p><span style=\"font-weight: 400;\">But why\u2019s it important?<\/span><\/p><p><span style=\"font-weight: 400;\">Most importantly, it can benefit people and the planet. It can also lead to better long-term financial performance for companies and their investors!<\/span><\/p><h1>\u00a0<\/h1><h2><b>What is responsible investing?<\/b><\/h2><p><span style=\"font-weight: 400;\">Responsible Investing is a way to use money to make a profit while considering people and the planet.<\/span><\/p><p><span style=\"font-weight: 400;\">When you invest in a fully or even partially responsible fund, the fund managers decide where to invest your money. They look at certain factors, which we call the three P&#8217;s, but you might find others calling them<\/span><a href=\"https:\/\/www.ibm.com\/think\/topics\/environmental-social-and-governance\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">ESG. That stands for Environment, Social and Governance (more on this later).<\/span><\/a><\/p><ol><li style=\"font-weight: 400;\" aria-level=\"1\"><b>People<\/b><span style=\"font-weight: 400;\">: This is about how companies treat their staff. They&#8217;ll examine how their suppliers treat their staff fairly and whether they consider the organisation&#8217;s impact in the broader community. For example, more responsible companies will have clear standards for staff treatment and fair wages.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Planet:<\/b><span style=\"font-weight: 400;\"> This looks at how companies use their resources, and whether they affect the environment, and whether the waste they produce has an impact on the planet. This is where you&#8217;ll often hear about companies setting <\/span><a href=\"https:\/\/kliimaministeerium.ee\/en\/national-energy-and-climate-plan\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Net Zero carbon emission goals<\/span><\/a><span style=\"font-weight: 400;\">. For example, more responsible companies will have plans to shift towards reducing carbon emissions, minimising waste, and meeting standards to protect nature.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Profit:<\/b><span style=\"font-weight: 400;\"> This looks at how companies are being run from a financial point of view and whether they consider their stakeholders when making decisions that could impact their business. If stakeholders are being listened to, it can show that companies are more considerate about how they make money. Those decisions can also have an impact on the other two P&#8217;s. They all fit together nicely.<\/span><\/li><\/ol><h1>\u00a0<\/h1><h2><b>Why is responsible investing important?<\/b><\/h2><p><span style=\"font-weight: 400;\">The world is changing. There&#8217;s no doubt about it.<\/span><\/p><p><span style=\"font-weight: 400;\">There aren&#8217;t infinite resources on earth, and we might find that, in time, those resources run out. That can hugely affect the economy and cause lots of market disruption.<\/span><\/p><p><span style=\"font-weight: 400;\">Let&#8217;s look at an example.<\/span><\/p><p><span style=\"font-weight: 400;\">Oil and gas are always prominent sectors in the market.<\/span><\/p><p><span style=\"font-weight: 400;\">Fossil fuels contribute to climate change, and if we don&#8217;t make changes soon, we&#8217;ll likely see more natural disasters and pollution that affect everyday life.<\/span><\/p><p><span style=\"font-weight: 400;\">With such a large industry taking up so much of the market, it&#8217;s not difficult to see how these companies could be impacted if they didn&#8217;t make necessary changes towards reducing their climate impacts and how the markets can also be affected.<\/span><\/p><h1>\u00a0<\/h1><h2><b>How can investing responsibly make a difference?<\/b><\/h2><p><span style=\"font-weight: 400;\">When you invest, you make meaningful decisions with your money, which could contribute to a brighter future.<\/span><\/p><p><span style=\"font-weight: 400;\">Here are some of the ways that can happen:<\/span><\/p><p><span style=\"font-weight: 400;\">Investing responsibly can motivate companies to improve. It&#8217;s about having a voice and using it to ensure companies follow the three Ps. Fund managers and the financial industry can talk to companies to help ensure this. This is more commonly known as active ownership.<\/span><\/p><p><span style=\"font-weight: 400;\">Some fund managers can set favourable tilts based on the three P&#8217;s and ensure that the companies your money is invested in are working towards a better future. They might still choose companies in sectors that can seem \u2018controversial&#8217;, like oil and gas, but they&#8217;ll ensure those companies are committed to improving in the future.<\/span><\/p><p><span style=\"font-weight: 400;\">Other fund managers use \u2018exclusions&#8217; to weed out companies with bad outcomes regarding the three Ps. For example, they might eliminate an entire sector, such as weapons manufacturers or tobacco companies, because they don&#8217;t think those companies can possibly hit the three Ps targets in the future.<\/span><\/p><h1>\u00a0<\/h1><h2><b>Understanding ESG factors and investing strategies<\/b><\/h2><h3><b>ESG Factors<\/b><\/h3><p><span style=\"font-weight: 400;\">ESG (Environmental, Social, and Governance) factors are criteria used to evaluate a company\u2019s sustainability and social responsibility. These factors are increasingly important for investors, as they can significantly impact a company\u2019s long-term financial performance. The three main categories of ESG factors are:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Environmental factors<\/b><span style=\"font-weight: 400;\">: This includes a company\u2019s environmental impact, such as its carbon footprint, water usage, and waste management practices. Companies that prioritise environmental sustainability are often better prepared for the future as they work to minimise their negative impact on the planet.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Social factors<\/b><span style=\"font-weight: 400;\">: This includes a company\u2019s relationships with its employees, customers, and the wider community, as well as its human rights record and labour practices. Companies that treat their employees well and engage positively with their communities will likely have a more loyal workforce and customer base.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Governance factors<\/b><span style=\"font-weight: 400;\">: This includes a company\u2019s leadership, management structure, and corporate governance practices, such as board composition and executive compensation. Strong governance practices ensure that a company is managed transparently and ethically, which can reduce risks and improve long-term performance.<\/span><\/li><\/ul><h3><b>Responsible investing strategies for beginners<\/b><\/h3><p><span style=\"font-weight: 400;\">Investing in ESG-focused companies can be a great way to align your investments with your values and potentially generate long-term returns.<\/span><\/p><p><span style=\"font-weight: 400;\">Here are some investing strategies for beginners:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Start by researching ESG-focused companies<\/b><span style=\"font-weight: 400;\">: Look for companies with a strong sustainability and social responsibility track record. This can involve reading sustainability reports, checking ESG ratings, and staying informed about industry news.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Consider ESG-themed ETFs or mutual funds<\/b><span style=\"font-weight: 400;\">: These investment products allow you to diversify your portfolio and gain exposure to a range of ESG-focused companies. They are managed by professionals who select companies based on their ESG performance, making investing responsibly easier.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Look for companies with strong governance practices.<\/b><span style=\"font-weight: 400;\"> These companies are more likely to be transparent and accountable, which can reduce the risk of investing in them. Consider factors like board diversity, executive compensation, and shareholder rights.<\/span><\/li><\/ul><h1>\u00a0<\/h1><h2><b>Measuring and reporting ESG performance<\/b><\/h2><p><span style=\"font-weight: 400;\">Measuring and reporting ESG performance is important in evaluating a company\u2019s sustainability and social responsibility. Here are some key metrics to look for:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Carbon footprint<\/b><span style=\"font-weight: 400;\">: This measures a company\u2019s greenhouse gas emissions and can be used to evaluate its environmental impact. Companies with lower carbon footprints are generally more environmentally responsible and better positioned for a sustainable future.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Diversity and inclusion: <\/b><span style=\"font-weight: 400;\">Metrics can be used to evaluate a company\u2019s relationships with its employees and the wider community. Companies prioritising diversity and inclusion will likely have a more innovative and engaged workforce.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Governance metrics<\/b><span style=\"font-weight: 400;\">: These metrics can be used to evaluate a company\u2019s leadership and management structure. Strong governance practices, such as having a diverse and independent board, can enhance a company\u2019s accountability and decision-making processes.<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">Companies can report their ESG performance using a range of frameworks and standards, such as the <\/span><a href=\"https:\/\/www.globalreporting.org\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Global Reporting Initiative (GRI)<\/span><\/a><span style=\"font-weight: 400;\"> or the <\/span><a href=\"https:\/\/sasb.ifrs.org\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Sustainability Accounting Standards Board (SASB)<\/span><\/a><span style=\"font-weight: 400;\">. These frameworks provide a standardised way for companies to report their ESG performance and can help investors make informed decisions. By using these frameworks, companies can demonstrate their commitment to sustainability and social responsibility, making it easier for investors to identify responsible investment opportunities.<\/span><\/p><h1>\u00a0<\/h1><h2><b>Investing responsibly for long-term sustainability<\/b><\/h2><p><span style=\"font-weight: 400;\">So, now you know what it&#8217;s all about, investing responsibly doesn&#8217;t have to be complicated.<\/span><\/p><p><span style=\"font-weight: 400;\">One of the easiest ways to make your money more meaningful is to invest in funds that match your personal views or that are committed to improving the planet.<\/span><\/p><p><span style=\"font-weight: 400;\">Investing in clean energy or sustainable funds means that your money is being invested by experts worldwide to help it grow and spread risk. It also considers the influence your investments can have on people and the planet.<\/span><\/p><p><span style=\"font-weight: 400;\">These responsible companies are more likely to be well managed, amongst the best placed for future growth, and contribute to moving to a sustainable low carbon economy.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-adf47ca e-flex e-con-boxed e-con e-child\" data-id=\"adf47ca\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>If you want to ensure your investing footprint is as small as possible, here&#8217;s how to do responsible investing.<\/p>\n","protected":false},"author":3,"featured_media":15657,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-19906","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"acf":[],"blog_post_layout_featured_media_urls":{"thumbnail":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-150x150.png",150,150,true],"full":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing.png",2240,1260,false]},"categories_names":{"21":{"name":"Articles","link":"https:\/\/moneyhub.ee\/en\/category\/useful\/articles\/"}},"tags_names":[],"comments_number":"0","rttpg_featured_image_url":{"full":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing.png",2240,1260,false],"landscape":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing.png",2240,1260,false],"portraits":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing.png",2240,1260,false],"thumbnail":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-150x150.png",150,150,true],"medium":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-300x169.png",300,169,true],"large":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-1024x576.png",800,450,true],"1536x1536":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-1536x864.png",1536,864,true],"2048x2048":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2025\/02\/Responsible-investing-2048x1152.png",2048,1152,true]},"rttpg_author":{"display_name":"David Bailey","author_link":"https:\/\/moneyhub.ee\/en\/author\/davidbailey\/"},"rttpg_comment":0,"rttpg_category":"<a href=\"https:\/\/moneyhub.ee\/en\/category\/useful\/articles\/\" rel=\"category tag\">Articles<\/a>","rttpg_excerpt":"If you want to ensure your investing footprint is as small as possible, here's how to do responsible investing.","_links":{"self":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts\/19906","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/comments?post=19906"}],"version-history":[{"count":0,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts\/19906\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/media\/15657"}],"wp:attachment":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/media?parent=19906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/categories?post=19906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/tags?post=19906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}