It does feel as if the world is at an inflection point: step up to the challenges of global warming and other non-sustainable pressures on the Earth’s resources today or let our children and grandchildren reap the havoc of the melting ice caps; sea water level rises; deforestation and a decline in biodiversity; desertification and the potential social and migratory upheaval that will accompany it. Our consciences have been piqued by the likes of David Attenborough in his Planet Earth II series and his appearance at Glastonbury in 2019, and also by Greta Thunberg who has challenged both the political leaders around the world and the older generations to take responsibility for the mess we are in, for the sake of future generations.

The internal challenge that many people feel is whether or not, on their own, they can really make any sort of meaningful difference, or if anything they do is simply a drop in the ocean. After all, looking at the data on CO2 emissions[1], we see that China, USA and India account for nearly half of all emissions, whilst the UK represents 1% of emissions out of the EU’s 10% contribution. The answer is ‘yes’, we can make a difference!

In our heart-of-hearts, many of us know that we are conflicted in our attempts to manage our carbon footprint. We will diligently recycle paper, glass and plastics on a regular basis, wheeling out the green bin every Sunday night, yet will jump into our large comfortable petrol or diesel cars and head off to Heathrow for a holiday in the Far East.  Even Greta Thunberg found herself embroiled in controversy when it was revealed that although she had taken a moral stand to sail, rather than fly, from Europe to the US to attend the UN climate change conference in a zero-carbon yacht, the yacht’s owners had to fly two crew to the US to bring the boat back!

On a personal level, there are all sorts of things that we can do to improve the sustainability of our lifestyles including how we invest our money. Today US$1 out of every US$4 under professional management in the US (around $12 trillion) incorporates some form of sustainable/socially responsible investing strategy[2].

For many, being able to make a difference, whilst not jeopardising the returns and risk control of a sensibly structured portfolio, may be something worth considering. This can be achieved by using systematic low cost funds, where they are available, that overweight companies with better sustainability metrics and underweight those that are not doing such a good job. This is a relatively new world, where data and metrics are evolving, new products are being brought to market and in which there is no perfect solution. All choices require trade-offs. We believe that investors can take a first, yet meaningful, step towards a more sustainable world. It’s a journey that we think is best navigated by sticking as closely to our guiding principles as possible and moving at a prudent pace. That requires a well-thought out long-term strategy, implemented using sustainability-focused funds only when they are robust enough to earn a place in a portfolio. One step in the right direction at a time…

Notes and risk warnings

Risk warnings

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

Errors and omissions excepted.

[1]     BP (2019) Statistical Review of World Energy.

[2]    GA Institute (2018) Breaking News: $12 Trillion in Professionally Managed Sustainable Investment Assets — $1-in-$4 of Total U.S. Assets.