“We are running the most dangerous experiment in history right now, which is to see how much carbon dioxide the atmosphere can handle before there is an environmental catastrophe”
Global warming and climate change has come to the forefront of not only personal concerns but also as a larger part of corporate dialogue.
Over the past few years a growing number of activists, groups and even celebrities have protested and implored us to stop buying single use plastic, reduce meat consumption in favour of veganism and move away from conventional modes of transport for greener alternatives.
But what if there was something else we could all do?
Something far more practical, with a far greater positive impact on our planet.
According to calculations and a comprehensive report made by the sustainable finance team at Nordea, investing in sustainable funds is 27x more effective in reducing your carbon footprint than eating less meat, using public transport and avoiding flying combined.
Which brings us onto the next question.
Is it my responsibility?
As an investor, the general consensus is that surely we’re better off investing in the so called traditional, long standing stewards of the stock markets. The Shell’s and BP’s of the world, those that pursue profits at all cost which in theory should translate to a positive return on an investor’s balance sheet.
In short, the answer to this all important question is a categorical no.
However, not just for the wide-reaching positive externalities created from supporting sustainable and ethical firms, but also (and perhaps most importantly for the majority of individuals) because it makes business sense.
Companies leading the way on sustainability are also leading growth trends.
Companies listed on the Climate Disclosure Project (CDP) have outperformed those not listed by 6% during the last 3 years, as well as outperformed leading industry benchmarks.
Unilever and L’Oreal, the only companies to get an A across CDP’s climate, water and forests A lists have both seen their share price increase by over 50 % in the last five years.
Companies that employ ethical and sustainable methods not only help to combat climate change, but it also opens them up to financial opportunities. Their ability to manage and mitigate risk has translated into supranormal corporate performance.
Combine this with the current trend of divestment (selling of shares) and underperformance of fossil fuel stocks and traditional profit driven firms, the decision to consider sustainable investments has become not only an ethical decision, but one of the wisest investment choices you could make.
2019 and beyond signals the turning point, where ethical investing moves from the niche and into the mainstream. It is a matter of time before sustainable funds form a mainstay of all diversified portfolios. Ignoring environmental, social and governance (ESG) issues has proved costly to fund managers and critically their financial performance. Investors are communicating this to global businesses via a rebalancing towards value adding, forward thinking companies of the future.
The old guard is changing. ESG integration is paramount. There has never been a better time to become a responsible investor and go green with your hard earned cash.
To find out more about ethical investing, as well as a comprehensive and independent financial review, please get in touch with us, here at Harrison Brook.