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 awoken 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 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 emissions1, we observe 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 may diligently recycle paper, glass and plastics on a regular basis, wheeling out the green or brown bin when required, yet will jump into our petrol or diesel cars and head off to the airport for a family holiday in the US.
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 strategy2.
For many, being able to make a difference, whilst not jeopardising the returns and risk control of a sensibly structured investment portfolio, may be something worth considering. This can be achieved by using low–cost, systematic funds, where they are available, that overweight companies with more favourable 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. When it comes to investing all choices require trade-offs.
At Wells Gibson, 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. Patience is required and 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…