Parts of London were brought to a standstill by the Extinction Rebellion last week. The protesters seek to bring to the public’s attention the ticking time bomb that the human race faces by not addressing climate change seriously or quickly enough.
The Extinction Rebellion is more an orderly assembly of rational modest citizens, many of whom have never protested before, than anarchists such as anti-capitalist / global protestors.
A seventy-year-old women who was arrested and wished not to be named said, “I have been a nurse and a childminder most of my life. The world we are leaving for the children and grandchildren is going to be horrendous and we let it happen. It happened on our watch. So we have to stand up and fight or lie down and fight.”
The movement’s message is frank and direct: governments, business leaders and citizens are too complacent in addressing the “existential” risks humanity is facing and must take urgent action before it is too late.
Grete Thunberg, the young Swedish environmental activist drove home this “burning platform” as a guest of the UK parliament, “when your house is on fire and you want to keep your house from burning to the ground, then that does require some level of panic."
2018 was the fourth warmest year since records have begun. Regardless of where you stand on the science of global warming the data trend is not good. We dump 10 gigatons of carbon into our atmosphere and up to 12 million tonnes of plastic into our oceans every year. Most sensible people will agree dumping toxic pollutants in our environment is not good for the planet or humanity and must be cut.
"Philanthropic organizations are responding to this challenge," says Margaret Towle, a social entrepreneur and former Bank of America Merill Lynch Wealth Manager, "we are observing the growing importance of “audacious philanthropy” in tackling a host of complex environmental and social issues - including climate change - in 2018, a global alliance of 29 philanthropies pledged over $4 billion to combat climate change."
So what can we the people do about this beyond peaceful protest and using the democratic tools (if we have them) at our disposal?
If you are fortunate enough to have a pension or investments, consider directing these funds to Sustainable Finance – money talks.
Sustainable Finance is a term “industry” has appeared to settle on covering a host of different investments that have an environmental and/or social impact: ESG (Environmental, Social and Governance) focused, UN SDG (United Nations Sustainable Development Goals), impact investing, ethical investing, faith-based investing, to name a few of the big ones.
“We have to stop framing climate change as a future problem. The evidence of climate change is all around us and we can no longer ignore the risk says Jeff Gitterman, the co-founder of New York based Gitterman Wealth Management and a seasoned ESG investor who advises on more than $1 Billion of sustainable investments.
“Climate change risks are no longer up for debate they are happening all around us. The canary in the coal mine is the reinsurers, they are dealing with weather-related claims at an unprecedented rate and don’t see a clear path to addressing these risks.”
Holly Ruxin is the founder of Montcalm Capital, a West Coast firm creating investments to support companies delivering positive changes to society. She sees a great shift in the investment arena.
“The stats are showing a tenfold increase in investment assets being deployed in the areas around climate change," says Ruxin, "there is great momentum towards investing in solutions to real problems we are facing in the world and we have a responsibility to continue to drive that momentum forward both as financial service providers and as investors.”
What most sustainable investments have in common is that they are seeking to invest in companies that will deliver a compelling investment return over the long-term, whilst doing social and/or environmental good. Essential to this are measures around good governance, which is central to achieving successful outcomes, and evidence suggests good governance may be one of the best and most appropriate ways to achieve long term sustainable investment returns.
Stuart Hutton of Simply Ethical in the U.K. has been an advisor in the Sustainable Finance space for years and recognizes the need for greater interaction with Financial Institutions to meet the urgent needs of the future.
“It is recognizing that the overall approach needs to be top-down as well as bottom-up says Hutton.
“Policy and regulation will always have a part to play in steering us towards achieving the SDGs by 2030, but it is equally important that evolving products meet the needs of investors desires to see us achieve environmental and social impact, and investors are looking for those products right now.”
There is more than $40 Trillion in pension assets in the OECD area. The main aim of a pension is to provide for us in the future when we are more vulnerable. It is long term investing at its best and no other product out there presently could be merited as needing more attention.
Many societies are trying to better manage “old age” and there is now a prevalence of longer living thanks to medical proficiency, varied diets and often a better work-life balance. As pensions look at our long term future what more justification is there for you to make well-informed decisions by thinking about the environment we live in, the social impact of decisions and how businesses operate and conduct themselves in striving for profit.
Millennials and Generation Y (collectively the “Under 40’s”), and women of all ages are beginning to flex their investment muscle. At conferences over the last year, I have seen more research presented that the Under 40s and women are increasingly seeking propositions that are sustainable and delivering impact, however, it is not just these segments. New Morningstar research finds that over 70% of investors are at least mildly interested in sustainable investments.
There are different products arriving to market all the time and with all the pressures from investors, the whole area of sustainable finance is set to grow rapidly. It will be important to do your homework and check that sustainable investments are doing what they are saying, an area that is of increasing concern to regulators.
In the era of digital, big data, artificial intelligence and social media, the power of the crowd travels at the speed of light when it comes to disseminating information and knowledge – investment managers and intermediaries are advised to pay attention here – if you are not offering investment products that make a real difference on the Sustainable Finance agenda, prepare to lose assets and customers at an increasing rate.
Arabesque is a global quant asset manager that uses ESG big data and machine learning in its investment process and is a leading provider of sustainability metrics through its platform. The firm’s mission is to contribute to the mainstreaming of sustainability by taking a science-based approach to ESG investing and data.
“Advancements in technology now enable us to gather and understand vast amounts of sustainability data and allow us to more clearly assess the performance of companies says Ciaran McCale, Head of Media and Communication at Arabesque.
“We’re in a new era of transparency with more corporate information available than ever before and new technologies to unlock its value. This has coincided with a widespread shift in demand for more sustainable options from both investors and consumers. I think we’re only at the start of a global movement where sustainability is integrated into every part of our lives, and finance will be key in this transition.”
Simon Puleston Jones, a former lobbyist in the financial services industry based in the U.K is now establishing a new global social network called WokenUp for those who want to give back and make a difference.
“People want to buy from, work for and invest in companies with purpose," says Puleston Jones, "making a difference on social and environmental causes is, therefore, a core strategic imperative for the leading companies of tomorrow."
When consumers demand to see a positive impact from sustainable investments in their pensions by threatening to move $40 Trillion of assets, their investment advisors and managers will listen, which will precipitate the interest of policymakers and governments.
Money talks, but it’s no small change when it comes to citizens taking action for the sake of the environment and humanity. Your pension and long term plans are irrelevant if the planet is under water.
In the very near future, the only investments that most people will make will be sustainable ones and this is a change whose time has come.
