Getting the benefit from responsible investing
Investors are looking beyond traditional measures of investment success to enhance the long-term returns on their investments.
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Why does Coutts think responsible investment is important?
We’re long-term investors and so we see anything that enhances long-term returns as a good thing. We’ve always tried to look beyond the traditional investment considerations that drive a lot of investment decision-making. This helps us understand the factors that could affect a company’s profits and opportunities in the future. Responsible investing gives us a lens to look at some of the more qualitative factors that can influence how well a company does over the long-term.
Responsible investing typically covers three main areas, frequently abbreviated as ‘ESG’:
- The environment – what impact a company has on the resources that sustain it, either directly or indirectly
- Social factors – covering things like workers’ rights, how a company treats suppliers or interacts with the communities it operates in
- Governance – looking at topics such as transparency of decisions, directors’ pay and internal controls
There’s increasing research showing that companies which treat these issues seriously can deliver more sustainable returns. That makes it an important part of the investment journey, especially for long-term investors like us.
Responsible investing seeks to enhance long-term returns by focusing on the way companies behave rather than the bottom line. Broadly, it considers a company’s approach to the natural environment, positive social policies – such as supporting fair pay and workers’ rights – and robust and transparent governance and decision-making. These are often abbreviated as ‘ESG’.
As well as investing in companies that score positively in these regards, responsible investors also engage with company management and use the voting powers that come with share ownership to encourage good practice.
At Coutts, we have embedded responsible investing considerations into our investment processes, in line with our approach as long-term investors. We also engage with company management and use our voting powers to influence their behaviour.
About Coutts Investments
With unstinting focus on client objectives and capital preservation, Coutts Investments provide high-touch investment expertise that centres on diversified solutions and a service-led approach to portfolio management. Our investment process is as disciplined as it is creative – ensuring tailored solutions with robust results.Discover More About Coutts Investments