I wonder what John Wesley would have made of socially responsible investing today? The founder of Methodism is widely credited with inventing the notion of investing with your conscience in the middle of the eighteenth century.
For Wesley, making money was a good thing‚ as you long as you also saved it and gave it away, and, crucially, provided you didn’t cause harm in the process.
“Gain all you can, without bringing harm to yourself or neighbour. Save all you can by avoiding waste and unnecessary luxuries. Finally, give all you can,” Wesley urged his followers in Sermon 44. Methodists, and Quakers too, took his exhortation seriously, refusing to invest in industries such as alcohol, tobacco, guns or slavery.
But it wasn’t until the late twentieth century that people began to invest with their consciences in large numbers. In the 1960s, for example, opponents of the Vietnam War boycotted US weapons manufacturers; in the 1970s and 80s, investors shunned South African businesses in protest at Apartheid.
The last 25 years, however, and the last five in particular, have seen the SRI market grow exponentially. Now more commonly referred to as sustainable investing, today it encompasses a wide range of issues, from protecting the environment to creating better working conditions and promoting social justice. As well as avoiding causing harm, investors are now able to support businesses that have a positive impact.
And the numbers are eye-watering. An April 2018 study by JP Morgan showed how, in the US, sustainable assets had grown by more than 200% since 2008. According to the Global Sustainable Investment Alliance, the sustainable investment sector accounts for nearly $23 trillion of assets — about a quarter of the market total.
Much of that growth has been fuelled by the desire of big pension funds, particularly in Europe and Japan, to put social, environmental and governance issues at the forefront of their investment policies.
Over the next few weeks, I’m going to be producing a series of videos for the UK-based wealth management company IFAMAX, which will tackle six common misconceptions about sustainable investing. The first video looks at how the industry has grown from being very much a niche market to be part of the mainstream. It also explains why the data suggests there is still plenty of room for growth, particularly in the UK.
Sustainable investing is huge, and will be huger still. And yes, I’m sure John Wesley would thoroughly approve.
Calling UK-based financial advisers
Max Tennant, the founder and Managing Director of IFAMAX, the financial planning firm that commissioned this series of videos, is one of the speakers at The Evidence-Based Adviser in Birmingham on Wednesday 20th March 2019.
As well as evidence-based advice firms, the event is also aimed at firms that are considering, or are already in the process of, transitioning to an evidence-based investment philosophy.
If you would like to come, there are just a few final places left. Register here.
Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
