Responsible Investing with Octopus Money Direct
Growing your money considering profit, people and the planet.
Our approach to responsible investing
We think being a responsible investor is a better way of investing. It looks at how profits are made when making decisions about what to invest in. Including considering people and the planet as part of these decisions. This is also known as making decisions including ‘Environmental, Social and Governance’ (ESG) considerations.
What you invest in matters. It can have a positive or negative effect on the world. But it’s difficult to see how your money’s put to work.
That’s where we come in. We help you to invest in a way that considers the future, because we want your money to be part of building a better future for all of us.
Read more about our approach to responsible investing.
When we invest your money, we consider profit, people and the planet.
Profit
How the companies we invest in are being run to make profit. More broadly this describes how companies employ, innovate and have economic effects on people and the planet.
People
How the companies we invest in consider their effect on people. More broadly this describes how companies treat their staff, manage their supply chains and affect communities.
Planet
How the companies we invest in consider their effect on the planet. More broadly this describes how companies use natural resources, manage their emissions and effect on the world around us.
Here’s how we do it…
We work with our Investment Adviser Aberdeen to make decisions about where we invest your money. We invest your money guided by our investment beliefs as long-term global investors.
Taking your money through a journey
- We invest more towards companies that are better run – known as a positive tilt (shift). This means they are considering people and the planet as part of the risks and opportunities in their industry. We measure this with an independent score-based system that tracks the whole of market.
- We invest less towards companies that are not being run well – known as a negative tilt (shift). This means they are not considering people and the planet as part of the risks and opportunities in their industry. We measure this with an independent score-based system that tracks the whole of market.
- We invest more into companies supporting positive change – known as sustainable investing. This means they will either be seeking to provide solutions for a low carbon sustainable future or be leaders in their industry.
- We invest very little in companies where their industry doesn’t support a brighter future or practices are harmful – known as exclusions. We do this by checking their activities against standards recognised as not helpful for people or the planet and minimum global standards.
Our approach to being an active owner
We recognise the power of investor ownership and using this to influence companies on important issues such as climate change.
The power of investor ownership
Investing can be a powerful way to use your money in different ways.
When you invest in shares you become a shareholder. Which means you’ll own a small part of the companies you put your money into. You can also invest in corporate bonds. These are like an IOU where you lend out your money to companies for an agreed period of time. You can also invest in something known as a fund of funds that itself invests in funds buying shares or corporate bonds.
When your money is invested it’s being used by these companies to build the future and make their profits. We work with experts to be active owners, seeking to influence companies on important issues.
How we use the power of investor ownership
We recognise that the investments we manage for you come with the power of ownership, which means our Investment Adviser Aberdeen and other Fund Managers can use this to influence the companies we invested in. Fund Managers work with the companies where your money is invested to consider if they’re responsible and on the right journey themselves.
This is done by:
- Talking to companies about their future plans
- Using the right to share views on key decisions companies make
- Working with others in the industry to progress important issues
Keeping ourselves in check
We know that helping our customers to invest responsibly is about more than just returns. It’s also about helping you to feel that your investments are like other choices you make in your day-to-day life and that they align with your values.
To do that. we’re making sure we’re:
- Investing in companies that are reducing their carbon footprint
- Using our independent score-based system to see if a company meets our requirements for people and the planet
- Putting less or very little of your money into companies that don’t share our outlook on the future
- Aiming to use the power of investor ownership to influence the companies we invest in, to put your money to good use
How we’re part of the change
Our approach is investing responsibly. But our mission is a journey to positive change. That means there’s still more work for us to do.
A better way of investing is just the beginning. Right now, we’re working on:
- Updating all our funds to investing responsibly. To manage risks, consider our changing future and how this best places us to make responsible returns. This allows us to consider people and planet in the way that profit is made.
- Developing how we report on the way we invest your money. As well as giving information on how profit is made, and how well companies are considering their effect on people and the planet. We will do this with the same requirements we use to determine which companies to invest in.
- Being more transparent on how we invest your money. We want you to be able to track your money’s journey.
Remember: this is a journey we’re all on. A sustainable future depends on us working together.
Latest articles
Beginners guide to responsible investments
Did you know that your money gives you a say when it comes to influencing companies on important issues such as how they consider Climate Change?
A beginners guide to investing in funds
So, you want to invest, but you’re not sure how?
What is investment risk?
What is investment risk, and how can it make you a better investor?
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What is sustainability?
Sustainability looks at the activities taking place today that could affect people and the planet in the future. It’s a way of using natural or human-made resources that seeks to minimise harm or deplete them. For businesses, it’s a way of balancing the needs of society and the economy with the environment that protects the future.
What is a low Carbon Sustainable Economy?
The future requires change to deliver both an economy that is structured around low carbon energy and systems that are sustainable. It shifts away from high-carbon activities like fossil fuel extraction or unsustainable consumption to drive the economy, and instead focuses on low-carbon activities like renewable energy production or sustainable approaches like circular production.
What is sustainable investing?
Sustainable investing seeks to make profit in a way that also improves long-term outcomes for people and the planet. This means investing in companies seeking to protect people and planet from harm, with a forward looking view on building the low carbon sustainable future we need.
What is ethical investing?
Ethical investing looks at how profits are made in line with certain values. For example, investors or fund managers might not want to put money into companies that manufacture weapons, or tobacco.
What is impact investing?
Impact investing seeks to put people and the planet alongside profit (not after it). This means investing in companies that have a plan towards positive changes in areas most needed on the journey to a sustainable future.
What is ESG?
ESG stands for Environmental (E) – we like to call this the planet, Social (S) – we like to call this people, and Governance (G) – we like to call this how companies are run. ESG can help investors and fund managers to look at how companies are managing their exposure to risks and opportunities in their industry. Companies can be benchmarked to consider how they are performing relative to others in their industry.
What is negative screening?
Negative screening is a way to invest less or invest very little money in companies that aren’t managing their risks or opportunities properly in making a profit. They are typically companies whose activities could cause harm to people and the planet. Negative screening reduces the amount of investment into these companies.
What is stewardship?
Stewardship activities are about doing the right thing. It’s about how fund managers and investment providers are being responsible by investing in companies that consider people, the planet and how profits are made.
What is active ownership?
Active ownership is the way fund managers and shareholders try to use their voice to make sure the companies they invest in are putting that money to good use. This entails talking to companies about their plans, voting on key decisions and working with others on important issues.
What is voting?
Voting is how shareholders and fund managers can have their say on the way companies are run and how they make their profits. Shareholders may vote on important issues that relate to people and the planet. Voting happens at the annual general meeting based on how many shares an owner has.
What is net zero?
Net zero is the goal. It’s the destination for reaching a state where greenhouse gas emissions going into the atmosphere are balanced with those being removed from it. The goal to reach net zero is 2050. This is in an effort to limit global warming to 1.5 degrees as outlined in the international Paris Agreement.