Although 2020 has been truly challenging for the world, a highlight for us here at Investing Ethically Ltd has been celebrating our twenty year anniversary. In this article we look back over the last two decades: the growth of ethical investment, the evolving nature of financial advice, and how we’ve developed as a company.
A lot has changed in twenty years (as you’ll see from some of the photos!). Throughout this time, it’s been the relationships with you – our clients – that make the job so worthwhile – and we hope you’ll enjoy joining us on this little trip down memory lane….
Our Early Years….
Investing Ethically Ltd was founded in 2000 by our first Director, Alan Kirkham. Alan was passionate about a simple idea – that if each of us, as investors, can affect how our money is being used then, collectively, we can make a real difference to tackling the problems of the world. Investing Ethically was founded on Quaker principles and – although none of our current Directors is a Quaker – values such as honesty, transparency and simplicity remain at the heart of how we run our business today.
The ideas linking money and ethics are far from new. Usury – making immoral loans – is forbidden in Islam and historically condemned in Buddhism, Judaism, Christianity, and ancient Rome. Ethical investment is generally considered to have begun in the 18th century, with religious groups such as the Quakers and Methodists avoiding companies involved in slavery, weapons, tobacco, or alcohol. In the 1950s and 60s, Trade Unions in the UK and USA began managing their pension funds to support social change. The 70s and 80s saw increased shareholder activism begin to influence companies’ behaviours, perhaps most notably with the success of the anti-apartheid movement in driving divestment from South Africa. The first publicly available ethical fund – ‘Pax World’ – launched in the US in 1971, for investors not wanting to support the Vietnam War. The first UK ethical funds – ‘Stewardship’ – were started in 1984 by Friends Provident (now run by Aviva), and the first specifically environmental fund – Jupiter Ecology – launched in 1988.
As a company, Investing Ethically Ltd started small and has grown gradually. Tracey and Phil were part of the original team with Alan. Phil remembers our first one-room office, which was either freezing-cold in winter, or boiling-hot in summer! From 2001 to 2007 we were based in St. Mary’s Works near the centre of Norwich. The location was good though everyone had separate offices, which felt a little disconnected. By 2006 Lisa and Andy had joined the team as Advisers, and in 2007 we moved to new offices on Whiffler Road.
The team in 2010
All of our advisers joined Investing Ethically for similar reasons – a concern for people and the planet, a desire to make a difference, an interest in economics and finance, and a wish to work for an organisation where ethics and values were integral to the culture.
Andy: “I had worked for several years for a number of big finance companies, including in the City in London, with a focus on ‘High Net Worth’ clients. The culture was ugly – with the focus on extracting as much money as possible from the clients, whatever it took, and with colleagues competing against each other like sharks. Over time I came to find this intolerable – the lack of scruples, the mercenary attitudes… this was simply not who I was! I was considering leaving the finance sector altogether but, rather fortuitously, heard about Investing Ethically through a friend-of-a-friend. I was – to be honest – initially rather sceptical! However, I met with Alan, and the team, and was won over by the integrity, the vision, the commitment to making a difference – a total contrast to where I had worked before.”
Prior to joining Investing Ethically, Lisa had worked in development education for NEAD (Norfolk Education and Action for Development), and first knew Alan because he rented an office upstairs in the same building. Her early memories of Investing Ethically include travelling to see clients in the ‘Bond Bug’ – Alan’s 3-wheeled bubble-car – with a feeling of risking life and limb on every trip!
Lisa: “With my background in education, what I’ve always loved about Investing Ethically is helping clients to understand their position and their options. This empowers them to take control and to make sensible, informed decisions. I also really enjoy puzzles: so helping clients to ‘slot together the pieces’ and so ‘solve the bigger picture’ feels very rewarding!”
In our early years, Investing Ethically faced many of the challenges familiar to new businesses – such as growing a customer base. These were the days before social-media, with the internet a novelty – and lots of time was spent physically handing-out leaflets! Developing our business meant understanding what financial services people needed; what ethical products were available; what was a fair charging-model; and how to balance the cash-flow to ‘keep the lights on’! Our early business was more transactional in nature, with notable peaks and troughs, and consumer awareness was low. At this time, ethical investment was still in its infancy; and the concepts still seemed radical, even extreme to some people. Ethical investors had far fewer choices (such as the number of ethical funds), which affected risk and volatility – although the idea that ethical investors experienced poorer financial returns was largely a misconception.
‘Effik the Viking’ – a characterful early voyage of discovery into the New World of marketing….
2012 was a big year in our history – when Alan retired and the new Directors took ownership: Andy, Lisa, Phil, and Tracey. Our first new employee, Debbie, took charge of marketing – and was with us until 2019. Other new starters have included Charlotte, initially as an apprentice in 2015; Hannah, as a graduate trainee in 2017; and Donna, as a trainee adviser in 2019. Our team of ten also now includes Aga, Tristam, and Clive.
The last 20 years have seen significant changes to professionalism in the financial advice industry as a whole – including greater emphasis on training and continuous professional development, and increased transparency on charges. Where-as at one time advice was often ‘one-off’ and transactional in nature, a good service now is about providing long-term financial planning, coaching, and support. This is very much how we operate at Investing Ethically Ltd. We put a big emphasis on training and development, and colleagues regularly study for professional qualifications. Our three advisers each achieved Chartered Financial Planner status in 2017 – with the company achieving overall Chartered Status shortly afterwards. We’re proud of this status and feel it really shows how we’ve matured as a company – rigorous, detailed, professional – with an emphasis on building personal and long-lasting relationships with our clients.
Our new Whiffler Road offices in 2017
As the business has grown, we’ve invested to improve. We refurbished and moved upstairs in Whiffler Road in 2017, providing a lovely open working-space (which, we’ve since discovered, also helps with ‘social-distancing’ – who knew that would be a ‘thing’!). Dealing with financial providers still requires too many paper forms, but our IT systems – though expensive – mean we’re now more ‘digital’ than ever. A less welcome expense has been the year-on-year increases in the charges we must pay simply to be in business – regulatory fees, PI Insurance, compulsory levies. It’s essential that the financial services industry is reliable for consumers. However, it seems unfair that so many of these regulatory costs are passed on to small and successful firms such as ours – who have tried to avoid ‘toxic’ investments at every turn – to compensate for the failings of less conscientious or well-run others. The knock-on consequence of these increased fees is, unfortunately but inevitably, that access to financial advice becomes more-and-more exclusive. We have always strived to talk to everyone who contacts us – it’s fundamental to who we are as a company.
In the last few years we’ve committed to being a Living Wage Employer, progressed to ‘Silver’ level on the Norfolk Carbon Charter, and been a founding-signatory to HM Treasury’s Women in Finance Charter. We have won Sustainable Ethical Planner of the Year and been finalists in Small Adviser of the Year and the Women in Finance Awards. We’re also active in our support for local and national charities, such as the Ted Ellis Trust and Freedom from Torture – and have plans afoot to increase such involvement as part of celebrating our twenty years.
Volunteering at Wheatfen Broad in 2019
Now in 2020, it’s clear that ethical investment has changed markedly from when we began, mirroring wider changes in society. Originally, investors had access to only a small number of ethical funds, and the emphasis was on ‘negative-screening’ to avoid industries such as tobacco and the arms trade. Fast-forward two decades to today, and it’s a very different picture. There are now hundreds of ethical funds available (some, as we’ll discuss below, being decidedly more ‘ethical’ than others). These include generalist funds, and more-specialist funds focused on specific topics such as solar, water, or healthcare. Negative-screening (‘avoiding the bad’) remains important, but the focus is increasingly on positive-screening – with the ambition to ‘promote the good’ in areas such as renewables, transport, and public health. Active engagement is also hugely important: with fund managers seeking to influence and motivate companies to change how and where they operate. We’ve worked hard to build our relationships with these ethical fund managers, both to augment our knowledge and to engage on clients’ ethical concerns.
Positive Screening aims to ‘promote the good’ in areas such as renewables.
Over the years we’ve seen changes in clients’ interests, reflecting changes in public attitudes and awareness. Traditional themes – such as the arms trade or nuclear power – remain important to many. There is less emphasis now on country-specific political concerns (such as avoiding the US or South Africa) and much more focus on global issues such as climate change and biodiversity. ‘GMO’ was very topical some years ago, and this is now part of wider concerns about food-production, nutrition, and health. Similarly, we’re seeing more interest from vegetarian and vegan investors. Emerging themes include soil degradation, mental health, cyber-security, and how society can best respond to the challenges of an aging population.
Climate change and biodiversity – two current major themes for ethical investors
Phil: “I am very fortunate to be able to say I love my job and I look forward to going to work. When I joined Investing Ethically in early 2001, I could not have imagined nearly 20 years later I would still be working for the same business. Working as an ethical specialist has always allowed me to combine my passion for the environment and natural world with my interest in economics and finance and in meeting and getting to know my clients. Looking back there have been some big challenges, not least 2020, but I can honestly say I feel very privileged to work with so many interesting and fundamentally nice clients and colleagues.”
Looking to the Future…..
These are exciting times for ethical investors, and for us here at Investing Ethically Ltd. It truly feels that what we’ve been working for – based on our original vision – is bearing fruit. Ethical Investment has moved from ‘niche’ to near ‘mainstream’!
However, this progress is bringing new challenges. The finance industry hides behind its own confusing language…. Sustainable Investment, Socially Responsible Investment (SRI), Impact Investment…..and right now ‘ESG’ (Environmental, Social, Governance) is the ‘buzzword’ on everyone’s lips. New ‘ESG’ funds are being launched every week, and all the major financial-services providers are vying to demonstrate their ‘ESG’ credentials. The growth of the sector is dramatic, with estimates of up to US$40 trillion invested by the end of 2020. So, our role at Investing Ethically Ltd is changing. It’s less about winning arguments on the merits of ethical investment, and more about helping our clients to ‘see the wood from the trees’. How confident can I be that my ‘ethical investments’ are genuinely and robustly ethical, and not just marketing ‘greenwash’? How can I ensure that my investments reflect my personal ethical concerns, and do I understand what is and is not achievable? Is there a real track-record of sustainable financial and ethical performance?
So, as we celebrate our 20th year, it’s been quite a journey for Investing Ethically Ltd! We’re still small (and happy that way), putting client-relationships at the heart of what we do: but we’ve grown in confidence, rigour, and professional-standing. We remain passionate and true to our founding vision and look forward to the challenges of the years ahead. We feel the future looks very positive for Investing Ethically Ltd and for our clients.
Our most recent team photo 2020, taken before Clive joined us (and before social-distancing!)