PwC have been all over the news in recent times following the scandal that saw the leak of confidential government tax plans that would impact some of their major clients. PwC have acknowledged and are taking action to repair failure in leadership and corporate governance. To me, this has been a stark reminder that ethical investing covers much more than environmental impact. 

In the investment universe, ethical investing is often referred to as ‘ESG’, which stands for Environmental, Social, and Governance. While environmental and social factors are relatively self-explanatory, governance refers to the way a company is managed, its leadership structure, and the systems in place to ensure accountability, transparency, and ethical behaviour. 

Some key topics include: 

• The Board of Directors: Is there adequate diversity, independence, and expertise? Is it free of conflicts of interest? 
• Shareholder Rights: Are voting rights and access to the right information appropriately structured? 
• Ethics and Anti-Corruption: What are the company’s policies and practices regarding ethical conduct, bribery, corruption, and compliance with relevant laws and regulations. 
• Risk Management: What are the company’s processes for identifying, assessing, and managing various risks, including financial, operational, reputational, and legal risks. 
• Working conditions: Are staff treated fairly? 

These are just a few examples of the key governance topics covered in ESG investing. This is also what makes ethical investing such a broad topic, as it typically means different things to different people. 

At Hewison Private Wealth, we do not make any investment changes without receiving express approval from clients on an individual basis. While we do not play the role of your ‘moral compass’, this process allows you as our client to let us know when a certain company or investment might not meet your ethical bias (if you have one), allowing us to alter the recommendations and ensure the portfolio is perfectly set up for you.