Ethical & Sustainable Investment

Question 1

What is the difference between ethical & sustainable investment?

Answer 1

Ethical is based upon individual morals and ethics (no consideration to profit)

Sustainable considers ESG factors as well as long term profits

Question 2

What are the UN Principles for responsible investment

Answer 2

Voluntary set of standards that firms can sign up to follow

Promise to incorporate ESG into investments

Question 3

What are the UN SDGs?

Answer 3

Set of 17 goals to be achieved by 2030

adopted by all UN members

Question 4

Give 5 examples of UN SDGs

Answer 4

1) No Poverty
2) No Hunger
3) Clean & Cheap Energy
4) Life under water
5) Gender Equality
6) Clean Water
7) Good Health
8) Education Quality

Question 5

What is the de minimis rule in screening?

Answer 5

If a firm’s revenue is above or below figure - screen in or out

e.g. alcohol sales >5% of revenue = screen out

applies to firms like supermarkets

Question 6

Give examples of ways to ethically invest

Answer 6

1) Positive Screen
2) Negative Screen
3) Best-in-Class
4) Faith Investing
5) Impact Investing
6) Philanthropy
7) Debt investing (SLBs, Green Bonds etc)

Question 7

Give an example of faith based investing

Answer 7

Sukuk

does not charge riba