Investors are increasingly concerned about the impact of climate change on their investments. An alarming report by the United Nations Intergovernmental Panel on Climate Change (IPCC) projects that emissions needed to be 40% to 70% lower, if we want to avoid climate catastrophe. Companies will be forced to adapt their business models to the policy, technology and market changes needed to facilitate the transition to a low-carbon economy.
In a list of the most-bought ethical fund options for 2019, based on customer data from investment platform interactive investor, investment trusts claim the three top spots and take up six places in total in the top 10 table.
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.
Over the past couple of years, asset management firms have launched a plethora of new funds, both passive and active, that promise to offer to invest in an ethical manner. Such funds come under a variety of names and labels, with the most popular being Environmental, Social and Governance (ESG) or Socially Responsible Investing (SRI).
Everywhere you look there is evidence that people are becoming increasingly concerned with environmental welfare. Voluntarily using a plastic straw today would be typically frowned upon, and protests have forced many major corporations to ban supplying and stocking them. Vegetarians and vegans are soon expected to make up a quarter of the global population, with 2019 being coined the ‘year of the vegan’.
How times change. It’s hard to believe that 40 years ago, when Money Observer was first published, Margaret Thatcher had come to power months previously, Franco’s era in Spain had ended only four years earlier and the UK had just three television channels. On average, men at state pension age lived for just five years (now it’s more than 14) the average price of a home was just under £14,000 and a pint of milk cost 15p.
The asset manager for a changing world” seems a fitting description of BNP Paribas Asset Management, following its recent research paper on renewable energy versus oil. In ‘The death toll for petrol’, Mark Lewis, the investment bank’s global head of sustainability research, sets out a compelling case for long-term investment in renewable energy for transportation, when assessed in terms of the energy return on capital invested – shortened to EROCI.
This year has been one of weather extremes. By April, the UK had already experienced almost 100 wildfires, making 2019 the worst year for such fires on record. Flooding in Lincolnshire in June drove hundreds of people from their homes. Then a late-July heatwave engulfed Europe, sending temperatures in France above 45 degrees for the first time on record. With such terrifying evidence of climate change before us, combating it has never been more urgent.