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08 July 2019

For Greta, good: How green are your investments?

The voice of activist Greta Thunberg has been heard loud and clear. After mobilising an international youth movement against climate change, the 16-year-old, who was nominated for a Nobel Peace Prize in March, has helped raise global awareness of the environment. In addition, more household and business decisions are being taken with the planet’s future in mind. People surveyed by polling company YouGov recently cited the environment as the third most pressing issue facing the country, after Brexit and health. Pope Francis has declared a global “climate emergency”, saying: “Our children should not have to pay for the cost of our generation’s irresponsibility.”
 
The environment is also at the forefront of investment decisions. The National Trust has announced it will remove £45m of fossil fuel investments from its £1bn equities portfolio by 2022.  Instead, it said, it will seek to invest in green start-ups and investments that benefit the environment. In June, Norway’s parliament voted for the country’s Government Pension Fund Global to drop coal investments worth around US$6bn as well as US$7bn of investments in oil exploration and production companies.
 
James Rowbury, Investment Research Coordinator at investment management and stockbroking firm Redmayne Bentley, said: “Although a small mandate compared to bigger institutions, it’s a clear step change in the way trustees are thinking about their impact on the environment.
 
“It looks like the capital from large institutions is beginning to dry up, as they look to avoid any media scrutiny on their underlying investments. Charities like the National Trust are obvious starting points for a wider industry change. The larger pension funds need to follow suit; that way, boards will be forced into reassessing their company’s impact in a more meaningful manner.”
 
The way people are being asked to consider their investments is changing. Index provider FTSE Russell has separated oil and gas companies from greener alternatives by relabelling a group of oil and gas producers “non-renewable energy”. Green energy producers have also been reclassified from “alternative energy” to “renewable energy.”
 
According to research commissioned by the Climate Change Collaboration ahead of London Climate Action Week, around 54% of Londoners surveyed said pension providers should provide fossil fuel-free funds, while half wanted companies that failed to abide by the Paris Climate Agreement principles to be removed from the London Stock Exchange entirely.
 
Among the pitfalls of ethical investing is the number of terms and definitions it currently has. There is environmental, social and governance (ESG), socially responsible investing (SRI), impact investing and ‘light’ and ‘dark’ green investing, but ultimately, do they all have the same aim? One person’s green investment could be another’s ‘sin stock’ - while many may wish to steer clear of fossil fuels, many oil companies fund projects that benefit the environment.
 
For investors seeking to make informed decisions about their investments, transparency is of course paramount.  In March, oil giant BP announced it would commit US$100m to fund projects to reduce greenhouse gas emissions in its Upstream oil and gas productions. However, BP is also among around 700 companies accused by the Carbon Disclosure Project (CDP) of concealing its impact on the environment. CDP, an alliance of 88 investors with US$10tn under management, has also targeted big names such as Amazon, ExxonMobil and Chevron.  Emily Kreps, global director of investor initiatives at CDP, said: “Companies must disclose their role in addressing the climate crisis we face. We know that climate change, water security and deforestation present material risks to investments, but these risks cannot be managed without proper information.”
 
James added: “As the number of people concerned about the impact of their investments increases, so does the need for transparency. However, with ethical investing being so complex , it’s imperative that every individual knows exactly how their portfolio is being invested and that it matches their unique set of values and requirements.”
 
Ends
 
For all media enquiries please contact Ruth Peterson, PR Executive, at ruth.peterson@redmayne.co.uk.
 
You can follow us on Twitter www.twitter.com/redmaynebentley
www.redmayne.co.uk
 
 
For Greta, good: How green are your investments?
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