ESG, Ethical, Sustainable and Socially Responsible Investment Today
Published / Last Updated on 25/04/2025
Whilst environmentally friendly, green and sustainable investing has been around of half a century., it is only in the last 10 years and following the 2015 Paris Climate Agreement, that ESG (Environmentally friendly, Socially responsible and corporate Governance) investing has become mainstream. The Paris Climate Agreement brought many nations to a common goal of reducing CO2e (carbon dioxide emissions) to net zero by 2050. In the UK, tough targets were set that impacted across the whole market:
- No new combustion engine cars from 2030.
- Larger companies required to report annually on their environmental impact and plans to continually reduce the same under corporate governance rules).
- Investment companies and fund managers being required to gradually ‘tilt’ away from investing in non-green companies and research and invest more in firms that are making progress towards ‘net zero’.
- Financial advisers being required to discuss ESG investment with all clients.
Our ESG Approach
We created our own ESG investment and video channels as well as an ESG questionnaire to work with clients as well as also having an employee benefit in place, where we subscribe to and have set up for each employee called a ‘Climate Action Workforce’. To date, we have planted nearly 1,700 trees, supported numerous projects and have offset our power use and CO2 emissions over the last 25 years in business.
Demand, Supply and Greenwashing
This created huge, yet artificially high demand for ESG stocks and funds resulting in a lack of supply as well as too many firms claiming to be ‘greener’ than they were, so called ‘greenwashing’. Confidence dropped, investment performance lagged, and Donald Trump has now left the Paris Climate Agreement twice. In addition, many countries are changing policy and paring back on net zero targets as pressure mounts for defence spending and production and being self sufficient for raw materials, coal and steel.
The UK has pushed back on emissions based vehicles, increased road taxes on electric vehicles and has even postponed energy performance certificate minimums of C for rental properties originally from 2025 then to 2028 and now 2030.
Patient Investing
You may have seen that the UK has the World’s four largest windfarms with two more to be added, Moray West coming on stream this month and another world record breaker Dogger Bank A, B and C already in construction. That said, many new solar and wind sites in the UK are waiting up to 6 to 15 years to be connected to the National Grid due to infrastructure shortages/problems. This means that much has been invested with little or no return so far and unlikely to deliver real returns for 6-15 years. There is compensation paid to firms by the Government, but it is nowhere near the profit and therefore growth you should start to receive eventually when these projects go live. This is what is known a ‘patient capital’ i.e., you must be patient and eventually your investments in ESG funds that have invested in wind and solar power will eventually come good.
