August 2019
SUSTAI NABLE I NVESTI NG
SUSTAINABLE INVESTING Is sustainable investing just the latest trend or a sector set to become a mainstream part of the investment universe? Sue Whitbread introduces this special focus in the May and June editions of IFA Magazine and comes to the conclusion that this is a powerful force which advisers should ignore at their peril
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here can be little doubt that public interest in matters of importance such as climate change, sustainability, the environment and conservation is on the rise – and sharply so. You just have to take a look at the TV or listen to the news and you’ll see it right there in front of you. Whether it’s the Extinction Rebellion campaign protestors bringing the streets of London to a close or Sweden’s sixteen year old climate activist Greta Thunberg’s outcry leading to tens of thousands of schoolchildren walking out of their schools to take part in the school strike for climate action, you can’t fail to notice that the tide is turning and attitudes are changing. Sir David Attenborough’s TV programmes such as ‘Climate change – the facts’ which was broadcast over Easter and the ongoing success of Blue Planet are also alerting viewers to the bigger picture as to what is going on around them and the implications of our human behaviour on the natural world.
Sustainable investing options are available across asset classes and through a broadening array of investment vehicles, including those suitable for retail investors and which advisers need to be aware of
INVESTING SUSTAINABLY And this rising tide of awareness about sustainability is having an impact on the provision of financial planning and investment advice too. No longer are clients simply concerned about the performance of their investment
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portfolios or the risks that they need to take to achieve that return. There’s now another element – and one which is assuming significant importance – which is that of investing sustainably. As well as being appropriate for their needs and attitude to risk, investment needs to sit comfortably with the client’s ethics, values and their moral compass. And the emphasis on this is set to grow significantly in the years to come. That’s why IFA Magazine is running a special focus on the topic of sustainable investing in both this edition and our June edition too. The emphasis on investing sustainably is already happening – and not just here in the UK. According to the Global Sustainable Investment Review (GSIR) sustainable investing assets in the five markets of Europe, the United States, Canada, Japan, and Australia and New Zealand stood at $30.7 trillion at the start of 2018, a 34% increase in two years. It reports that in all of these regions except Europe, sustainable investing’s market share has also grown. From 2016 to 2018, the fastest growing region has been Japan, followed by Australia/New Zealand and Canada. The largest three regions— based on the value of their sustainable investing assets—were Europe, the United States and Japan. Clearly, sustainable investing constitutes a major force across global financial markets. In almost all the markets represented in the GSIR report, sustainable investing has grown in both absolute and relative terms in the two years since the beginning of 2016. As a result, the report outlines that that sustainable investing represents more than 50 percent of total professionally managed assets in Canada, Australia and New Zealand, nearly half in Europe, 26 percent in the United States and 18 percent in Japan. This growth reflects the expanding awareness of the business case for sustainable investing. Asset managers in the United States, Canada, Australia and New Zealand reported in regional surveys that major motivations for their use of sustainable investing strategies are the desire to minimise risk and improve financial performance over time. This may also explain
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