Beyond ESG and Investing with Sustainable Impact - Issue#5.
Past issues have put the case that Responsible Investing is a must. Now it’s time for financial advisors to spread the word and for us all to champion those that are making strides on our behalf.
ESG: Time for the Financial Advisors to jump onboard
Retail flows into ESG products trail both domestic institutional investment and flows abroad. One reason for the slow take up of ESG strategies among retail investors is the enduring misconception that they must sacrifice returns to invest responsibly.
Education of retail investors will go someway to resolve this misconception and move money out of the passive investment strategies. A simple and free means is to forward this onto your clients as the content is designed to be for education and promotion of impact investing and sustainability. Many retail investors wrongly assume that their advisers are already investing their money responsibly and are consequently not explicitly seeking ESG labelled products. Many are not and there is a massive opportunity for those advisors that gain the insight into what the fund managers are exposing their client’s capital too. Most managers now have a detailed ESG policy that can be provided to clients.
By way of example Allan Gray
https://www.allangray.com.au/b/an-a-for-our-esg-policies/
By way of example Fidelity
If you are using an investment manager that is not applying ESG you are paying management fees for half the job.
The year ahead will see further development with managers and superannuation funds aligning to the UN Development goals.
The message from the chief executive of the Principles for Responsible Investment, Fiona Reynolds, is simple: without responsible investment, we will all suffer.
“Individuals will all pay the price for inaction on climate change and the longer we delay the more cost it will be on all of us,” she said. In what she called a “disconnect,” the idea that institutions can invest money without thinking about the world in which their beneficiaries are going to retire “makes no sense.”
Paris
From bushfires, to coral bleaching, to pandemic, you could be forgiven for wanting 2020 to be done with but there is a lot to reflect upon. It’s been five years since the world’s leaders met in Paris and hammered out the terms of the Paris Agreement. But the world is still very far from on track to actually addressing global warming. A recent report looks at what’s necessary to limit global warming to 1.5°C, the most ambitious goal of the Paris Agreement, and how much progress is happening across six key sectors. The short version, given by Kelly Levin, one of the report’s authors, is: “We are falling woefully short of where we need to be to avoid the worst climate change impacts.”
Talk is cheap – Action is needed and Australia has been placed in the Naughty Corner. The transition to renewables and sustainability is going to be a huge opportunity and risk for investors in 2021. A great piece from the guardian well worth the read
Equity Markets
The ASX had its best month in over 30 years, following similar strong gains from US and global markets. Equity markets, pretty much provided one year’s worth of returns in one month. Take care reading performance tables. The one month, three month and six months can look fantastic but the 3, 5 and 10 years are what counts. What really counts is 30 and 50 years but let’s take a baby step to 10 years for now.
A New Sustainability Champion
When I started researching who is making a real impact on sustainability, I was sitting in a tiny recently opened café. My efforts were focused on finding people that were making huge strides in sustainability. Whilst enjoying my coffee, a drop in requested a take away coffee and what happened next make me realise those making small steps count too. The owner / barista would not supply a coffee unless you had a reusable cup or purchased one of his. Yet he will provide you a clay cup on loan with the comment “if you would like, please use ours and return when you can”. Amazing. What the owner (barrister Steven) does is simply and effective. He operates a “Cupbank”. Steven is attempting resolve Australia’s one- billion-a-year disposable cup catastrophe. It’s a swap and go, closed-loop, reusable coffee cup scheme. He is so committed to closing the loop that there are no disposable cups available. The only cups are beautiful crafted clay cups. I’ve been using mine endlessly and they are well made and simply awesome in the hand. With a missions “ELIMINATE THE NEED FOR SINGLE-USE CUPS ENTIRELY” Steven is my sustainability champion. Every cafe can jump on board the scheme. If you are wondering where the café is …..well too bad. I only tell my close friends and son where the best fishing spots are and great coffee shops are the same but please check out Stevens artesian cups. https://claycups.com.au/
stephen@claycups.com.au
Success Story of 2020 - Australian Marine Conservation Society
What a year for the AMCS.
Here’s just a few of the wins achieved this year:
· Banned single-use plastics in South Australia! From early next year, plastic straws, cutlery and drink stirrers will no longer be allowed in our southern state, stemming the flow of these dangerous plastics into our oceans and saving turtles and wildlife. It won’t stop there - QLD, WA and the ACT have all committed to ban plastic too!
· Stamped out live shark finning in the Great Barrier Reef! For years loopholes have allowed the illegal practice of live shark finning to slip under the radar in Queensland. By securing new rules requiring sharks to be brought to shore in one piece with their fins attached, fishers cannot cut the fin off a critically endangered scalloped hammerhead shark, dump its body, and pass it off as something else.
Please visit this link to spread some love of sharks with the kids
https://www.marineconservation.org.au/shark-posters/
Looking ahead
On behalf of the team we would like to take this opportunity to wish you all a healthy and happy festive season.
We would like to thank you all for your continued support in what has been an extremely challenging 2020.
We are looking forward to reconnecting with you all in 2021. A taster for whats on offer for 2021 will be the launch of sustainability fund reviews, and a detailed review of aquaculture and whether it is failing us within the guise of sustainability.
A safe and sound festive period to you all.
Disclaimer notice
The information contained in this investment note is meant for informational purposes only and is subject to change without notice. The content is provided with the understanding that the authors and publishers are not herein engaged to render advice on legal, economic, or other professional issues and services.
Tarren has over 20 year’s experience working in equities markets and within boutique Fund Managers. Tarren began his career at Mercantile Mutual in Client Service's before moving to London and working in transition management for Merrill Lynch. Recent roles include working at PM Capital Ltd for over eight years as the Portfolio Analyst with responsibility for ESG analysis and investment analytics. Tarren worked at Investors Mutual where he was the Senior Analyst responsible for research data and communication. He joined Paradice Investment Management as the Head of Client Services He holds Bachelor of Science from the University of New England and a Diploma of Financial Planning. Tarren has completed the PRI Academy training in environmental, social and corporate governance (ESG) issues for the investment and finance community.
Memberships and Affiliations
RIAA (Responsible Investment Association Australia), AIA (Australian Investors Association), ASA (Australian Shareholders Association), Taronga Zoo Conservation Society, Zoos Victoria, Ocean Watch Australia, Australian Marine Conservation Society, Munda Biddi Trail Foundation, CastleCoveClassicCarClub, ToyotaLandCrusierClub, Pre-1940 Triumph Car Club, Standard and Triumph Car Club, NRMA Classic Car Club and Australian Motorlife Museum.