Business insight: Barchester Green Investment
Should more advisory firms be adding an ethical investment approach in their client offering? Adviser Business Review talks to Barchester Green Investment director John Ditchfield about how the firm has built its business on the growing desire for ethical and environmental investment and why advisers who ignore the area are missing an opportunity
Once considered a ‘niche’ segment of the financial advice world, ethical investments have started to flourish in recent years amid growing consumer interest in climate change and issues such as protection of the environment, labour rights and business ethics.
Following on from the launch of the first ethical retail fund in the UK in 1984, the UK has become Europe’s largest sustainable and responsible investment market. In 2014, over £13.5 billion was invested in UK green and ethical retail funds, according to research body EIRIS.
It is a trend John Ditchfield, director at Barchester Green Investment, expects to continue: “I would certainly say ethical investment is becoming the area to work in now, as there is growing interest from investors.”
Founded in 1985 in Salisbury, Barchester Green Investment claims it is the UK’s longest established adviser specialising in ethical and environmental investment. It has grown considerably over the past 30 years, with staff totaling 19 and around 3,000 clients on its books. It is part of the Castlefield group, which manages close to £400 million for charities, social enterprises, business and individual private clients.
Barchester Green Investment works with clients to draw up a profile, which allows them to match their investments with their ethical values and create a bespoke portfolio, and John says the company does not struggle to attract new business.
“Of course, all businesses require effort to grow and we have worked hard to build a strong reputation and brand, and ensure our clients are happy with the service they receive. Now we are in a position where we have become the market leader for this area – our message appeals to people and prospective clients actively approach us a result.”
John joined Barchester Green Investment in 2003, working with clients to serve their financial needs without compromising their values. He previously worked for Oxfam campaigns and the Single Regeneration Budget and European Social Fund.
“I came from a bit of an unconventional background into financial services, but I was interested in an alternative approach to finance. My eye was turned towards corporate and social responsibility and I wanted to find a company interested in ethical investing,” John says.
“I suppose a part of me was idealistic, but I also realised this was a really good business to be in. With the global population now in excess of seven billion, industries which are focused on preserving the environment and sustaining communities are thriving.”
Sustainability over negative screening
John says when he started at Barchester Green Investment the industry was heavily geared towards negative screening, with investors listing specific industries they were opposed to. Fast forward a decade and the market has moved on from this “simplistic approach” to offer a more positive and progressive investment route, which he is passionate about.
“What we are seeing emerge across the world is a rise in the number of sustainability investment funds, offering greater choice to investors, as this market moves into the mainstream. People want to invest in companies that are working towards solving the societal and environmental problems we face, while offering the prospect of good long-term growth,” John says.
The firm’s main holdings are Kames Ethical Equity, WHEB Sustainability, Alliance Trust Managed and Absolute Return and First State Asia Pacific Sustainability.
Advisers waking up to the potential
“The financial advice industry needs to wake up and realise that investors have a desire to support companies seeking to do good. There’s a huge market for what we do and lots of people share our values. Financial advisers steering clear of this area are making a mistake,” says John.
“Concern about returns is often cited as the main reason to avoid this investment market but fund performance and expected growth of industries has shown it is no longer a choice between the two.
John believes those advisers with knowledge and experience of ethical and sustainable investment have a competitive edge over their peers. “A lot of advisers prefer to direct their energies elsewhere and are not personally inclined towards environmental investment, often because they don’t want to have to do the research,” he says.
While ethical fund selection can be a more complex process than mainstream funds, he says, with some lacking ratings, nevertheless, the ethical investment market has the potential to grow going forward and he believes those advisers who are able to make recommendations in this area will offer a more valuable service to their clients.
“It’s a very interesting area,” he says. “It is and will continue to be extremely important and I personally feel the financial advice market should be devoting more time and effort to it.”