THOUGHT LEADERSHIP
IT WILL TAKE TIME TO EMBED THE CHANGES , IT WILL TAKE TIME FOR ALL INDUSTRIES AND COUNTRIES GLOBALLY TO ADAPT . IT WILL TAKE TIME , EFFORT AND RESOURCES TO CHANGE . IT ’ S NOT AS EASY AS ‘ FLIPPING A SWITCH ’.
since . As a result , ESG funds seemingly fell out of favour , with investors opting for returns first , ESG second . Our industry loves returns ! ESG investing still has its place , and why shouldn ’ t it ? I was reminded of this by Sarasin Portfolio Manager , Ben Gilbert , recently . Technological advances have meant that , per megawatthour , hydro , solar and offshore wind-farm power have become cheaper to produce than traditional combustion sources . So , more investment could mean more efficient , cheaper to produce , energy in the long run , leading to healthy profits and potentially making these companies the winners of tomorrow . Electric vehicles or other futuristic green cars ( hydrogen cars anyone ?) might be the same . I ’ m a self-confessed ‘ petrol head ’, however , there is a case for moving the c . 41 million vehicles ( c . 33.5 million cars ) on UK roads away from combustion engines for the sake of the future . I think we are all aware that infrastructure needs to catch up somewhat , and that the ‘ green ’ investing conversation can ’ t miss out the obvious manufacturing issues facing EV companies .
The enormous mining efforts tearing up the ground , the cost of emissions on shipping resources , refining resources , shipping the refined product , building the vehicle and shipping the finished article to its final destination . This all makes a significant dent in being green before you ’ ve even driven your first mile . It seems like an oxymoron calling EVs ‘ green ’, however , change and refinement take time and commitment . Those companies that adapt and innovate could again be the winners of tomorrow . However imperfect it may be now , for the next generations there is a lot of good to be gained from us all moving from terrible CO2 emitters to simply bad , before upgrading to neutral or better . It will take time to embed the changes , it will take time for all industries and countries globally to adapt . It will take time , effort and resources to change . It ’ s not as easy as ‘ flipping a switch ’. SDR and the labels have made it clear that now any old investment toting itself as ‘ sustainable ’ with little to back it up will not be tolerated , which is great for those that are seeking to make an impact . We needed the definitions to be clear , so that the clients who care ( as we all should ) can invest directly into the types of companies that can make the changes the client is looking for . Might the water be choppy ? Yes . Will there be winners and losers ? Inevitably . Will this promote the changes we want to see ? TBC . It ’ s easy to come across as self-righteous when talking about ESG investing , but that ’ s not my intent . Pragmatically , the world needs change , and those companies that are at the forefront of change stand a great chance of doing well . Even though the road has been rocky recently , the longer-term benefit is there for clients . For example , despite recent performance , Tesla is up over 13,000 % since listing in 2010 , Enphase Energy is up 1,400 % since listing in 2012 – give me the name of a client who wouldn ’ t like to reap the rewards of the next big , green company if they can deliver the same pattern of return demonstrated above . The labels are introduced to help fund and invest in companies that have the desire to make changes that will positively affect all of us . Funding companies that have the desire to develop new or existing technology that will make the world a better and greener place , and in the long term , the returns , will follow as more people around the world adopt these technologies in day-to-day life . I concede , not all of the technology will be areas as exciting as AI or big data , however , there is still a lot that can and will be developed . My genuine hope is that we are able to sustain the pressure for change globally . Will I be gluing myself to the M25 or throwing orange paint on artwork ? No , I will not . Will I remain optimistic that we as a global society on the whole might continue to care about what happens next ? Yes . I will . Is ESG dead ? No , to the contrary , I think this is just the beginning .
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