3D Investing is the product of 26 years of experience in socially responsible investment. Over that time I’ve seen a significant increase in interest and diversity in the range of approaches. It reflects a strongly held view that investment is critical to making the world a better place. I see 3D Investing as much more than a business opportunity although it’s that too – it’s a way of making a tangible difference that reconnects investors with their money and with the potential to make a greater social impact then pure philanthropy.
3D Investing is based on a very simple philosophy of doing good, avoiding harm and making money. My strong conviction is that you can make money and do good at the same time and this is backed up by considerable evidence over a long period. Given the choice, I believe that many investors would prefer to do some good with their money if they can also meet their financial objectives.
But just because a fund says it invests positively, doesn’t mean it actually invests in that way. It’s vital to test the claims of funds and analyse the underlying investments to see how well reality matches the claims. We check each stock in the funds to facilitate detailed and objective analysis.
So how does it work in practice? Firstly, there’s no point doing good if you’re also investing in companies that have a negative impact. We therefore check each underlying holding for involvement in activities that might be considered to be ethically controversial – for example, fossil fuel extraction, tax avoidance, human rights abuses, poor animal welfare and tobacco manufacture. This means that we can identify the extent of any negative impact.
We then seek to identify those funds that have the most positive impact in terms of meeting the United Nations Sustainable Development Goals. To this end, we assess what proportion of the fund is invested in companies that derive more than 50% of their revenues from activities that directly offer solutions to social and environmental challenges. These include companies that provide healthcare, clean energy, sustainable food, low carbon transport, social housing and that improve resource efficiency. We can then compare funds and identify the leaders.
We believe that our process enables portfolios that truly make a positive impact, but as the saying goes, ‘talk is cheap’. We therefore take considerable care to report on the impact that portfolios make, identifying shortcomings as well as the positive impacts. Critically we don’t just give examples, but base reports on objective data to give investors a clear picture of the true impact of their money.