The narrative for responsible investing has changed dramatically in the past decade, writes FundCalibre managing director Darius McDermott.
As people have become increasingly aware of the impact the likes of global warming, water scarcity and a rapidly increasing global population are having on the world, mindsets have changed and that has led to an increasing focus on these types of investments.
Gone are the days when it was simply an exclusionary focus - with managers avoiding stock X, Y or Z for one reason or another.
Today, factors like having a good carbon footprint and treating employees fairly have risen to prominence.
Naturally, there are still sceptics who believe going down the ‘responsible' path ultimately hinders performance.
But this latest downturn has been a good test for many of these funds and it seems to be a test they have passed with flying colours.
The Rathbone Global Sustainability fund is one such example. Since the coronavirus began to wreak havoc on global markets on 20 February 2020, the fund has fallen 1.8%, compared to an average loss of 7.8% for funds in the Investment Association Global Sector, having rebounded more strongly than its peer group.
Manager David Harrison focuses first on selecting stocks with strong cash generation but will actively avoid businesses involved in unethical or unsustainable practices.
This removes the likes of alcohol, animal testing, gambling, nuclear power and poor employment, environment and/or human rights practices from the fund's remit.
Each holding in the fund must also have at least one positive environmental, social or governance attribute.
The investment process is similar to that used by Carl Stick's highly-regarded income team and, in addition, will engage the help of Rathbone Greenbank Investments - a dedicated ethical and sustainable investment division.