Potent Catalysts of Change

By Bernadette McNeill, Investment Manager at Ramsey Crookall

We are at a hinge moment in human affairs where the impress of profound new developments is bringing about fundamental shifts in social priorities and concerns. The following article seeks to explore these and indicate the kind of investment choices that should help future proof your portfolio.

At the 2020 World Economic Forum, Donald Trump called for a rejection of "predictions of the apocalypse". He said, "America would defend its economy" and referred to climate activists as "prophets of doom". In the same speech, he announced that America would join an initiative to plant, restore and conserve one trillion trees. These sound bites on the world stage make up part of an increasing clamour, a concentration of global thinking in a time when technology has created instantaneous international communication. The US President’s views on climate change seem to be in stark contrast to those of the previous governor of the Bank of England, Mark Carney. He said, “The world will face irreversible heating unless firms shift their priorities soon”. The public conscience seems alive to the impact that our habits and choices may have on the planet. At the end of 2019, Sir David Attenborough said he felt encouraged by the response to plastic pollution. The Isle of Man has a proud record here, as recently reported in the National Geographic magazine. 15,000 people from the islands population of approximately 84,000 are regularly involved in clearing litter, much of which is plastic, from the Manx coastline. Local charity beach buddies, founded by Bill Dale, is largely responsible for this staggering feat.

To me, the so-called "prophets of doom", are rather, potent catalysts of change. They are part of a growing and much broader trend towards a mode of life that is guided by standards which promote and improve sustainability. Every facet of life seems to be affected, from the weekly grocery shop, our choice of car, of drink’s container, how we heat our homes and how and if we travel abroad. In addition to the ecological goals on climate change and reduction in carbon footprint, momentum is gathering that seeks to address inequality, poverty, issues pertaining to health and well-being, hunger, the availability of high-quality education and access to clean water and sanitation.

In the world of investment, these ideas were historically considered a clash of value and values and thought not particularly lucrative. Demographic pressures, changing values and sharpening concern for the future of the planet are reshaping government policy and taking the issue of sustainable development to the centre ground, and increasingly to the core of investment portfolios. To have missed the sustainable investment mantra in professional investment circles in 2019 and earlier would have required an extended period of hibernation. Every meeting, every conference, almost every gathering of industry insiders had a question or element of focus on what the industry calls ESG. ESG stands for Environmental, Social and Governance and under the rubric of sustainable investment these headings neatly describe a theme that is gaining traction.

For your investment portfolio, this could simply mean restricting investment in companies involved in tobacco, armaments or environmentally injurious activity for example. The trend is, however, towards something slightly more involved. As the industry is getting to grips with sustainable investing, the quality of available data is improving and this data, which might analyse a company's social and governance business practices, for example, can identify previously hidden opportunities or underlying risks with investing in that company. An experienced investment manager can help you focus on key themes within sustainable investing such as the implications of an ageing global population, resource scarcity, disruptive innovation, shifting economic power and the growth of clean energy to name a few. They can simplify an investment world, riddled with terminology that can create a fog of confusion. They can guide you in the search for suitable investments in the pursuit of your sustainable investment goals.

A proverb, purported to originate from ancient Greece states, “A society grows great when old men plant trees in whose shade they know they shall never sit”. I think we should concern ourselves with a future beyond our lifetime, for the sake of posterity.

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