In the run up to the tax year end in April, eagled-eyed investors will notice a profound change of rhetoric in fund management companies’ marketing messages. Whether it was triggered by Sir David Attenborough’s television programmes or the ‘Greta Thunberg effect’, over the past couple of years climate change has become even more widely accepted as the biggest challenge facing the world.
Could you give up flying to save the planet? Barring Greta Thunberg, I suspect that most of us, including myself, would squirm if asked this, which is why a Guardian headline - “I didn't want to fly – so I took a container ship from Germany to Canada” - caught my eye. I wondered if the writer was retired, or a teacher with long holidays: how else would you manage a 15-day transatlantic crossing?
Impact investing, defined by the CFA Institute as “investments that seek to create positive environmental or social impacts alongside a financial return” has been a key buzzword for the investment industry over the past few years.
Despite this, impact investment products available to retail investors remain thin on the ground. Why are there not more impact funds out there? And is it possible to deliver true impact by investing in listed companies?
Like many of your readers, I have been progressively moving my (modest) Isa investments into ‘ethical’, socially beneficial and sustainable portfolios. In selecting these, the green symbol used in your unit trust and open-ended fund statistics section has been very useful.
The increasing coverage of such funds in articles by Rachel Winter and others has also proved to be very informative.
This month’s star letter flags up a dilemma likely to gain increasing prominence, given the significant rise in interest in sustainable investment over the past 18 months or so.
Climate change is real: we are now starting to see the consequences. The UN warns climate-linked natural disasters are now occurring at the rate of one a week. We are already in an adaptation scenario, needing to invest in ways to cope with a more volatile climate while simultaneously needing to redouble efforts to mitigate further climate change.
In the midst of a general election campaign, we are reminded every day that language matters. There is great resource spent, to give just two examples, on whether one calls a second referendum on EU membership a “People’s Vote”, and on whether to call the Benn Act to stop a no-deal Brexit a ”Surrender Bill”.
And language matters when it comes to responsible investment, too.
I like the notion of ethical investing and note your portfolio, but I prefer to invest in investment trusts. That said, while I can see which of my trusts invest in oil or tobacco companies, the rest of the picture is rather opaque. Do you have any sort of ranking for the ethical status of trusts, or a facility to ‘look through’ the investments held in each trust and rank them ethically?
Andrew Johnston, by email
It has been three months since we presented our initial selections for the new Money Observer ethical portfolio, and the time has flown by. “May you live in interesting times,” goes the apocryphal Chinese curse; in this first update, we review market developments over a very ‘interesting’ period, explore what these have meant for returns from the portfolio, and assess how its performance compares with that of markets in general.
In an effort to provide greater clarity and consistency in the highly subjective area of ethical/responsible investment, the Investment Association (IA) has today published an industry-wide framework of terms and categories.
The aim is to make it easier for investors to navigate this rapidly growing part of the retail fund market by introducing a common language and clear product categorisation.