THE Irish will certainly be hoping the ‘Green’ is very noticeable next week once again, when they march on Prestbury Park, praying for multiple Irish-trained winners. We had a record number of winners (23) in 2021! If Dermot Weld has been named as the King of Ballybrit, certainly Rachael Blackmore was the Queen of Cheltenham over the four days of the festival in 2021.

The buzz word in the investment industry over the last few years has been the acronym ESG! In my experience (and this is backed up by a recent survey from leading investment house Amundi) very few people know what it stands for which is: Environmental, Social & Governance.

There is a strong onus now more than ever on the investment industry here in Ireland to explain in plain and simple English what ESG means and the benefits accruing to the investor by taking such an approach.

Client’s associate this with going green, but what is ESG and how has the longest ESG fund in the current market performed over the long term? (Aviva’s Stewardship Ethical Fund launched in 1989).

Environmental

This is the most obvious of the above acronym that people can understand. It’s the analyses of a company’s impact on climate change, pollution, energy consumption, resource depletion, disposal of hazardous waste, animal welfare and so forth.

A good example here is the recent decision by Tesco to cease selling baby wipes containing plastic here in Ireland from next month. Wipes are the most common cause of sewerage blockages.

Social

Social will examine and look at a Company’s impact on all its stakeholders and on society. Put in simple terms, one might think about a particular company’s impact on people. Fairness, workers’ rights, diversity and working conditions and so on, are some good examples, e.g., Apple.

Apple states: “Apple is committed to the highest standards of social responsibility across our worldwide supply chains.”

Governance

This looks at how well a corporate body addresses areas like the use of accurate and fluid accounting policies, directors pay and their treatment of shareholders, especially in terms of their voting rights and their ability to exercise influence on a company’s management when required.

It would also examine any potential conflict of interest in the choice of board members. It might also cover such areas as political donations.

An example of a company with good corporate governance is Walt Disney. Taken from its website, it states: “In addition to charitable giving, Disney supports local economies by contributing significant tax revenue and by consuming local goods and services. As an employer, we hire, train and support a workforce and its families.”

Aviva’s Stewardship Ethical Fund

This Aviva investment portfolio focuses on long-term capital growth through investment in companies across the world.

Its objective is to maximise returns through investment in an ethically screened and diverse universe of companies.

Fund objective

The Portfolio focuses on long-term capital growth through investment in companies across the world. Its objective is to maximise returns through investment in an ethically screened and diverse universe of companies.

Fund strategy

The fund invests in companies screened against defined responsible and sustainable criteria including exclusions on tobacco, alcohol, weapons, gambling, nuclear and pornography. The fund also requires companies to meet sector standards on social and environmental impacts.

Niall Rooney B. Comm. ACII. QFA FLIA is financial planner with CityLife in Galway.

Email: niall@citylifegalway.ie