‘BT has been the biggest problem for my fund’

It can be difficult for investors to balance their environmental concerns with the desire for high returns. But according to Mike Fox, who runs the Royal London Sustainable Leaders fund, savers no longer need to forgo some of their gains if they want to invest in sustainable businesses. He tells Telegraph Money why.

It is targeted at people who want environmental and social issues to be part of their investment strategy. Consumers who have a broader interest in sustainability are our main investors, but we also attract traditional investors who just want good returns and think sustainable funds are the way to do that.

There is increasing interest in sustainable investing. I think this may be linked to demographic changes. I started to run this fund in 2003 and if you had asked people then what role environmental, social and corporate governance issues should play in investment products, the answer would have been none. Now it is a bunfight to prove these credentials. There are two specifics we look at. The first is to consider the products and services of a company and understand the ways it can benefit society. The second is to look at the environmental, social and corporate governance of a company. If companies can meet one or both of those criteria they would be an option for the fund.

If you look at ethical or growth investing, you will find numerous definitions of those terms. It’s the same with sustainable investing: it is unrealistic that everyone will agree to the same differences and nuances. But investors do need to make sure they are aware of the investment style of a fund and that it matches what they want. Our holdings in the financial sector

CV: Mike Fox

Mike Fox trained as a chartered accountant and formerly worked as an analyst at Cooperative Asset Management. He became a fund manager in 2003, joining Royal London in August 2013 when it bought the Co-op’s asset management arm. are split between banks, life assurers and property. Property is a pretty good fit for a sustainable fund. We have companies with strong environmental and social standards. Likewise, life assurance companies bring a lot of social positivity.

People’s perception of banking has changed over time, but we would argue that savings and mortgages are demonstrably socially positive. We have held Lloyds since after the financial crisis, when it had a clearout from a governance perspective.

We also hold HSBC and Standard Chartered because they have a strong bias to emerging markets and we tend to think those are parts of the world where banking services have a greater level of social positivity.

But we wouldn’t own Barclays, which has a much bigger investment banking element to it.

Royal London’s Mike Fox tells Adam Williams how investing sustainably can still offer good returns

We are in the low to medium risk part of the sector, so we don’t invest in healthcare or biotech. In technology we wouldn’t tend to invest in smaller businesses.

We also have no commodities in the fund, as we have struggled to find any that meet our criteria from a sustainability or financial perspective.

We prefer to look for companies focused on intellectual property and innovation.