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Sustainable Investments: 4 considerations when choosing a portfolio

In an era where aligning financial goals with environmental and social values is of growing importance, making informed choices is crucial. There is no common methodology or even definition for “sustainable” or “ESG” investing.


17th October 2023


Lydia Reynard


1. What are your personal objectives when investing in a sustainable portfolio?

Sustainable investing can mean different things to different people, but you should always focus on what is most important to you when investing your savings. Some of the most common sustainable objectives I hear from our clients are around preferred areas of interest or exclusion lists. For example, your objective might be;

  • Avoid investing in companies or practices you find unethical or harmful to society and the environment.
  • Achieving tangible environmental and social outcomes.
  • Favour companies that prioritise solving environmental, social and governance (“ESG”) issues.
  • Achieving comparable returns to investments with no sustainable mandate.

The important thing is to think carefully about what you are trying to achieve and consider how you can meet this objective through your investment portfolio.


2. What are the investment managers objectives when managing a sustainable portfolio?

If you are looking for a professional to manage your investments sustainably, it is important to understand how they would develop a plan to meet your requirements. Different investment managers will integrate sustainability in different ways. For example:

  • Negative screening - excluding investment in certain companies or industries, for example, excluding investment into tobacco manufacturers.
  • ESG themes – investing in companies which contribute to a particular environmental or social theme, such as investments focused on renewable energy companies.
  • Impact Investing – investing where there will be a measurable social or environmental outcome as well as financial gain, for example, investing in a wind farm seeking to generate a certain amount of electricity per year.
  • Best in class – investing in companies which perform better across ESG metrics against their industry or sector peer group, such as investing in one car company above another as it produces lower carbon emissions.


3. Do your sustainable objectives align with your investment managers’?

If you are looking to invest in a professionally managed portfolio, find out whether your objectives align to those of the investment manager. If not, you should engage with your investment manager on whether they can accommodate your objectives into the investment strategy or consider if you would be happy to compromise on any of your objectives. Some objectives may require trade-offs with other portfolio objectives, such as expected returns or diversification. As such, an in-depth discussion may be helpful to ensure you are comfortable with your investment portfolio.


4. What does successful look like for you?

Like your objectives, your measure of sustainable investment success will be personal. 

  • If your objective is to avoid investing in certain companies or practices you consider unethical or harmful, a measure of success might be that this has been adhered to during your investment period. 
  • If you are focused on achieving tangible environmental or social outcomes, you should identify what these outcomes are and ensure you have access to the data to quantify this. 
  • If your measure of success is relative to a portfolio with no sustainability objectives, you should choose a benchmark to do this. This will enable you to compare metrics like performance or ESG.

Navigating the world of sustainable investments is complex. If you are considering a sustainable investment solution and would like to discuss your objectives, we can help you. Our experienced wealth managers can help you understand these and other ESG and socially responsible investment terms and develop a personalised investment strategy that aligns with your values and goals.


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Further reading

Net Zero: 5 key investment considerations

Some investors assess the environmental credentials of their portfolio using a key metric: supporting the transition to a net zero world. It is estimated that US$4 trillion of investment will be needed each year by 2030.


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Author -

Lydia Brook

Lydia Reynard

Senior Investment Manager

Lydia joined Arbuthnot Latham in September 2020. She advises clients on their investments and leads Arbuthnot’s Sustainable Portfolio Service.

Lydia started her career at Barclays Investment Bank where she spent two years focused on Equity Derivatives and Structured Products before moving into wealth management and joining LGT Vestra in 2016.

Lydia is a CFA Charterholder and holds an MSci in Chemistry from University College London. Lydia has been named in PAM Insight’s 2022 Top 40 under 40 rising stars in the wealth management industry and twice in Citywire’s Wealth Manager Top 100.


This communication should be considered a marketing communication. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is for information purposes only and does not constitute advice, a solicitation, recommendation or an offer to buy or sell any security or other investment or banking product or service. You should seek professional advice before making any investment decision. The value of investments, and the income from them can fall as well as rise, and may be affected by exchange rate fluctuations. Investors could get back less than they invest. Past performance is not a reliable indicator of future results. The tax treatment of investments depends upon individual circumstances and may be subject to change.

The contents of this communication are based on opinions or conditions as at the date of writing and may change without notice. To the extent permitted by law or regulation, no warranty of accuracy or completeness of this information is given and no liability is accepted for its use or reliance on it.