Sustainable Investing – Just One Element of Sustainability
By Rebecca Scaife
Published on: January 30, 2023
Those who regularly tune into the financial media will have noticed a significant upsurge in commentary around sustainable or ESG investing over the last few months.
Two main forces have driven this, the first being a regulatory requirement to consider sustainability when making investment decisions, and the second is the increased significance to investors as they seek to align their investment decisions with their own personal values.
As proponents of this important subject for over 25 years, we welcome this increased attention. In the late 1990s, one of our founding firms, Ethical Financial, was established with a particular interest in ethical and sustainable investing. Since then, our continued research into this field has given us unique perspective and insight into both the technical and emotive aspects of the subject.
However, possibly the most important lesson that we’ve learned, is that considerations need to go far beyond how ‘green’ a fund is and the potential impact that a sustainable approach might have on your investment returns.
As depicted by the image below, Sustainable Investing on its own is not the answer to the world’s sustainability challenges. Instead, the answer to these challenges lies with each individual and the actions that we collectively take. Sustainable investing is simply one single element in a bigger solution to prolong the survival of our planet.
Supporting good companies who take sustainability seriously, and not investing in companies that are solely focused on profit at all costs, makes a lot of sense. As does changing our practices in all of the other areas illustrated above. The actions of all of us, across each of the areas, is what will make the most positive difference.
Probably the biggest example of positive impact due to human concerted effort was the worldwide ban on CFCs. Introduced in 1987 in response to the growing hole in the earth’s ozone layer and the dangerous rise in UV radiation reaching the Earth’s surface, this has thus far been the most effective international environmental treaty ever implemented. The ozone is on the path to recovery, if not fully restored. A report released by the UN on 9th January 2023 found that the ozone layer is on track to recover within four decades.
Within Ireland, do you remember when it was the norm to pack your shopping in free plastic bags given out by the retailer? We know the impact these bags had when they eventually ended up in landfill, in our oceans or caught up in branches within our hedgerows. Now 99% of us bring reusable bags when we go shopping. We can make changes together.
The solution to the world’s sustainability challenge will be all of us doing a little more in several areas.
You might think that at Everlake, our one business goal is to encourage investors to invest sustainably. It’s not. We want to encourage everyone to leave the planet a better place for the next generation, and considering sustainable investing has a part to play in this.
When we talk with clients about sustainability in relation to investing, we broaden the conversation beyond talking about investment funds. We encourage you to think holistically as to how a sustainability approach fits with your life and your values.
We recognise that an individual’s values are personal to them and will generally fall somewhere along a spectrum, from typical investors who haven’t got strong sustainability preferences, to some investors holding extremely strong views on the exclusions that they wish to achieve with their investments.
Wherever you are on this spectrum, your children and grandchildren will thank you in the future for doing a little more today. They won’t just be thinking about the money that you invested sustainably, instead they will remember all those societal changes and smaller actions that you took to leave the world in a better place for them.
