With the fallout of the events of last year still hanging over the world, the beginning of the new decade has not been up to the standard anyone was expecting. With global social unrest and the priorities of humans across the world being re-evaluated, how will this affect global finance and investment?
Ethical and social responsibility have been growing themes in the world of investment for many years and, indeed, in many other areas of life and business. On our blog we recently discussed ‘responsible investing’ and what this means, so how will this be highlighted as we continue into the decade?
In this article, Jenn-Hui Tan at Fidelity International discussed what they believe will be three key sustainability themes that will be at the forefront of our attention over the next year. This is based on our “fundamental needs as human beings”, which is undoubtedly a rising influence in choices by investors looking for more ethical portfolios.
Here, we will be addressing each of the three main points discussed in the article and contextualising them within the framework of our work here at Greenfields. If you’re a current client or even a prospective client of ours, it may be worth taking the below factors into account when thinking about your investments and plans for the year ahead…
As mentioned in Fidelity’s article, the climate crisis is without a doubt one of the most critical issues of our time. Without immediate and sustained change to global carbon emissions, the impact of the climate crisis will be irreversible and catastrophic.
Because of the current global focus on climate change and carbon emissions, many regulations linked to business and finance have been, or will be, changed. As independent advisers, our practices are regulated by the FCA, which means at all times we must adhere to the regulations set out by them. This means that we need to be asking all the necessary questions of our clients that include questions on ethical investments, so you should expect us to discuss this with you throughout the year.
With some focus having shifted towards employee and community welfare as a result of business practice during the COVID-19 pandemic, and equality and fair business practice having grown as a topic in recent years, it’s no wonder that these is a key message being highlighted throughout 2021.
Not only has the physical health and safety of employees and communities been threatened during the pandemic, but so has their financial wellbeing, with massive inequalities only being heightened by the crisis. Many larger businesses and billionaires have added large sums to their wealth over the last year, while lower income people and smaller businesses and enterprises have been catastrophically affected. Just take a look at this article by the Economist, which details how the richest have simply gotten richer throughout 2020. If inequalities such as these are not kept in check, major problems can arise on a political and social level.
By shifting focus to the sustainability of businesses and the welfare of all people involved in them, investors will be able to help reduce these inequalities, which we believe will be another dominant theme in the world of finance as we recover from the pandemic and subsequent recession.
As the Fidelity article states, digital tools and technology have been instrumental in the continuance of “normal” life throughout the pandemic, but this has also highlighted the state of economic inequality, with around “half of the global population” having no internet access, particularly in developing nations.
However, as the article states, the digital divide is not simply split between the developed and developing world. Throughout the UK alone, more than 880,000 children live without broadband according to the Independent, and the UK government has been criticised for failing to “provide schoolchildren with access to equipment and reliable internet connections that would allow them to study remotely”.
With this in mind, it is clear that another key theme for the year ahead will be the focus on shrinking this gap, and investors may have to keep this idea of the “digital divide” in mind as will businesses who are looking to maintain ethical practices and ventures.
Recovery from the COVID-19 pandemic will take work on a global scale, as well as a personal one, and those with the power to invest funds also have the power to shape how we build back as a community. By keeping an eye on trends across the world of finance, we can be vigilant and more accurately calculate chances of risk, as well as chances of success in various ventures. Responsible and ethical investing has grown in popularity in recent years, and with the focus on “building back better” after the struggles of the last year, keeping an eye on these themes throughout the months ahead could prove invaluable.
If you’re looking for help and guidance on your investments, we’re here to help. Our experts have the skills and expertise to help tackle your goals, while keeping your preferences in mind. To book a free initial meeting with us, call us on 01258 857101, or email us at ian@greenfields.biz today.
This article is for information only and should not be treated as individual advice. No action should be taken in respect of this article without independent financial advice. This information represents the opinion of Greenfields Financial Management Ltd. only.
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