Social Responsible Investment Advisors (SRI)

Where people, planet and profit can live together.

What is Socially Responsible Investing?

Socially Responsible Investing is an investment strategy which seeks to consider both financial return and sustainable social/environmental good to bring about positive social change, without causing harm to current or future generations.

SRI allows you to align your values to your investment objectives.

Know exactly where your money is invested

SRI has always been at the heart of our investment philosophy since we launched our first SRI portfolio in 2008. We screen and choose all our funds, not just SRI portfolios, against a range of Environmental, Social and Governance (ESG) factors so you can see the impact your investments are having.

Why are SRI funds important to us?

Kim Holding, Portfolio Manager at Ellis Bates

Giving you peace of mind

Ellis Bates carefully consider environmental and social elements of every SRI fund before we invest, using a comprehensive and patient screening process.

Pros and cons of socially responsible investing

Kim Holding, Portfolio Manager at Ellis Bates

Frequently Asked Questions

What is SRI?

Socially Responsible Investing (SRI) is the practice of investing into companies that ‘do good’ (or, at the very least, ‘do no harm’) to the environment and the community. These companies have sustainable business practices capable of being continued indefinitely, without causing harm to current or future generations, on the expectation that they have higher investment potential over the long term.

What does ESG mean?

Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments and have been in existence for decades.

Ellis Bates have applied these principles since our inception and remain focused on companies with strong ESG track records, exceptional management teams, attractive growth prospects, and that are benefitting from long-term trends.

What is Greenwashing?

Greenwashing is the practice of companies making misleading environmental claims for marketing purposes without following through with their pledges. In doing so, companies aim to improve their reputation, to attract environmentally and socially aware consumers and investors and, in turn, to increase profits.

The term ‘greenwashing’ was coined in 1986 by American environmentalist Jay Westerveld in his essay examining practices of the hotel industry. Three years prior, while staying at a hotel in Fiji, he saw a note from the hotel asking customers to reuse their towels, claiming this would reduce ecological damage to the oceans and reefs. Ironically, the resort was demolishing large areas of the island for its expansion at that time, and their ‘reuse of towels’ policy was actually a cost-saving measure.

As more companies jump on the ‘sustainable’ bandwagon, washing is becoming increasingly common, so it’s important for investors to carry out rigorous due diligence on companies before they invest.

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How does Ethical investing differ from SRI?

Ethical investing uses ethical principles as a guideline. This involves filtering out unethical companies involved in the ‘sin stocks’. At the same time, it may involve supporting ethical companies that are making a positive contribution through their products and services – for example, one that isn’t causing damage to the environment, or exploiting its workforce by paying low wages.

What is the Conference of the Parties (COP)?

The Conference of the Parties (or COP for short) is the name given to the parties of the United Nations Framework Convention on Climate Change (UNFCCC), which is the world’s largest treaty for addressing climate change. Meeting every year since 1995, COP is an important platform for nations to discuss and reach consensus on how to protect the world in terms of environmental issues. Due to the scale of its potential impact, climate change takes a global effort so coordinated action is crucial.

The 21st Conference of the Parties (COP21, also called the Paris Agreement) is particularly important, as it is the first ever legally binding agreement on all countries of the international community to combat climate change.

COP26, which took place in Glasgow in 2021, has been described by climate change experts as the most significant climate event since COP21, as it was the first time since 2015 that presidents and prime ministers around the world had to report back on the progress made on their previous commitments for climate action, as well as submitting even more ambitious goals for ending their contribution to climate change. COP27, held in 2022 in Egypt, sought renewed solidarity between countries to deliver on their previously agreed pledges; and an agreement was reached for a ‘loss and damage’, fund whereby rich nations are being urged to increase their financial aid to poorer countries impacted by climate change.

What is Net Zero?

There is no single definition of “net zero”, so not every target that organisations set is the same. Some talk about becoming “carbon negative” or “climate positive” (in other words, they are removing carbon from the atmosphere). Others talk about becoming “net zero” or “carbon neutral” (they are offsetting their CO2 emissions via other projects, such as tree planting). Others talk still about becoming “climate neutral” (they are referring to all greenhouse gases, not just CO2). This vast array of terminology can be confusing.

What are Scope 1, 2 and 3 Emissions?

When organisations talk about Scope 1 emissions, these are emissions that come directly from their own operations. Scope 2 emissions are indirect emissions from the generation of their purchased energy. Scope 3 emissions are emissions from end-users, which these can be much larger than Scope 1 and 2 emissions combined.

How are the SRI portfolios different to the Growth portfolios?

Just because we apply SRI screens to our SRI portfolios, doesn’t mean our other portfolios are invested in companies demonstrating poor practices!

Diligent investors wouldn’t look to invest in companies that have demonstrated poor environmental, social or corporate governance (ESG) standards, as ultimately these businesses are more likely to fail and won’t be around in years to come. Rather, ESG considerations are a fundamental part of our decision-making process, which we incorporate across our portfolios.

If we’re incorporating ESG across the board, why don’t we just amalgamate all our portfolios into one, single SRI strategy?

There are two main reasons for this:

  • As advisers and managers, we have a responsibility to offer a range of products to suit our clients’ different financial needs and objectives.
  • We’re aware about imposing morality on others, because we believe that everyone has the right to decide what their own values are.

What is fossil divestment and engagement?

Fossil divestment is an investment strategy that involves severing all ties with, selling out of, or refusing to own securities issued by companies that extract and/or produce fossil fuels, as a way of addressing climate change. By rapidly shifting investment away from this sector, and into green technologies and renewable energy sources, fossil divestment aims to put public pressure on fossil fuel companies to improve their environmental performance, while promoting the transition to a low-carbon economy.

What is the history of SRI?

While the modern SRI movement evolved from the political climate of the 1960s, its roots date back to the 18th and 19th centuries – but back then, it was more about being socially conscious:

Socially Conscious
John Wesley, founder of Methodism, sets out the principles of social investing in his sermon The Use of Money. He invites worshippers and investors not to harm their neighbour through their business practices and to avoid certain industries.

Early 1900s
Negative Screening
The Methodist Church starts to invest, avoiding companies involved in gambling and alcohol. The Quakers follow suit shortly after, instead avoiding weapons manufacturers.

Social Pressure
Development of modern SRI movement including equality for women, civil rights and labour rights. Dr Martin Luther King establishes the model for SRI efforts (e.g. ongoing dialogue, boycotts and direct action targeting specific corporations).

Sullivan Principles
Rev Leon Sullivan develops the Sullivan Principles, which helps to end apartheid in South Africa.

First Ethical Fund
The first retail ethical fund is launched in the US for investors opposed to the Vietnam War.

Environmental Disasters
Increasing awareness of environmental issues following Chernobyl, Exxon Valdez oil spill and Union Carbide.

Positive Screening
Investors start considering how companies are making a positive impact.

First UK Ethical Fund
Friends Provident (now BMO) launches its Stewardship range.

Legislative Policy
It becomes UK law for workplace pension schemes to declare if they took account of any environmental or ethical factors when deciding what stocks to invest in.

The Paris Agreement (aiming to limit global temperature increases to 1.5°C since the Industrial Revolution, by reducing greenhouse gas emissions) is adopted. Today, it has been ratified by 190 countries in developed and developing markets, representing 90% of emissions.

The United Nation launches its 17 Sustainable Development Goals, with the aim of addressing a range of global challenges by 2030.­­­­­­­­

Government Action
Governments around the world respond to the challenges of climate change. For example, the UK launches its 10 point plan, the US rolls out its $2 trillion Climate Plan, and China pledges to become carbon neutral by 2060.

Intergovernmental Panel on Climate Change (IPCC) Report
The IPCC (the United Nations body for assessing the science related to climate change) produces a 4,000 page report showing the Earth’s climate has warmed by 1.2°C since the 1850s, which is worryingly close to the Paris Agreement’s goal. They attribute this increase primarily to unsustainable human activities, such as burning fossil fuels and deforestation.

Governments from almost 200 countries come together to agree co-ordinated action to tackle climate change. Many declare they are willing to take action, and are ramping up their efforts – even economies that are heavily reliant on fossil fuels (as producers and users) make noteworthy pledges to become net zero by 2060/70.

Environmental Investment Funds
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How are the SRI portfolios helping to combat environmental issues?…

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SRI Fund Screening
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Negative screening Every fund in our SRI portfolios has a…

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How do we screen our SRI funds?
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We explain the process of how we choose our SRI…

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