More money has been invested in funds focused on environmental, social and corporate governance (ESG).
In the 12 months to June 2020, flows to ethical and ESG funds doubled over the year, according to investment platform Hargreaves Lansdown.
The pandemic seems to have heightened interest in a more diversified portfolio with this type of investment.
Many experienced investors fear that the economic fallout seen during the coronavirus could be repeated if the world fails to reduce carbon emissions.
If you want to switch from investing in crude oil to more sustainable types of investing, read this to give you some ideas.
Where should I invest my money ethically in 2021?
Becky O’Connor of investment platform Interactive Investor thinks there will be more of the same in 2021.
She says: “The political focus on green issues will keep the well-being of the planet at the forefront of people’s minds – the UK will host COP26. [the UN Climate Change Conference] and the United States rejoined the Paris Agreement on climate change.
John Moore, of wealth manager Brewin Dolphin, says seeing more traditional investments stumble in 2020 has given some experienced investors pause.
“When oil stocks and airlines performed poorly, it validated a lot of people who thought it was not good to have such stocks financially and ethically.”
What ethical actions will do well in 2021?
Moore says ethical investors shouldn’t be stuck in a mindset of good companies and bad companies.
“BP jumped after vaccine announcement [and the prospect of life, and energy use, returning to normal], and oil, mining and airline stocks will rally – but they’re not good for ESG, are they? ” he says.
“However, large companies like BP are trying to change – he’s partnering with local authorities on their ‘net zero carbon’ vision, for example. »
Companies such as BP are also large and financially sound enough to change and invest in new areas for the long term – charging points for electric vehicles, for example.
Not only that, but takeover businesses are also likely to change in order to overcome the challenges.
To learn more about this topic of investing trends, read our guide to ethical investing.
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