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Earth Day 2018: four wealth managers on how they are supporting a sustainable future

Earth Day 2018: four wealth managers on how they are supporting a sustainable future

This year’s Earth Day, which fell on 22 April, focused on ending plastic pollution. We spoke to four wealth managers with sustainability embedded in their investment approach, to see how they are supporting a more environmentally friendly future.

Andrew Gilbert: Investment manager at Parmenion Capital Partners 

James Lawson: Partner & co-founder of Tribe Impact Capital 

Claudia Quiroz: Investment director and lead investment manager for Quilter Cheviot’s Climate Assets Fund 

Craig Brown: Associate director and portfolio manager at
Beckett Asset Management

What is your firm – and the wider industry – doing to reduce plastic pollution?

AG: The only way plastics will be reduced is if the external cost on the environment is integrated into business and investment decisions or industries are appropriately regulated. If a client adopts an environmental, social and governance (ESG) mandate, then fund managers have to integrate these objectives within their analysis, decisions and engagement with companies, so ultimately clients are the ones in control.

(Pictured above: Andrew Gilbert, investment manager at Parmenion Capital Partners)

 

JL: We support fund managers and single businesses who are at the forefront of either recycling and extending the life of existing plastics, thus reducing waste and identifying and developing new eco-friendly polymers and replacements that help move us away from not just plastic, but other non-sustainable materials. This is arguably the biggest impact we can have, but having said that, one must never underestimate the power of small actions like the humble bamboo coffee cup. In isolation they are small. Collectively they lead to big change.

CQ: From an investment perspective, our dedicated sustainability fund, Climate Assets, invests in companies providing waste management and recycling services as well as companies involved in developing alternative packaging materials. From a corporate perspective, at Quilter Cheviot, we drink from smart water taps. We also recycle all our waste, particularly our milk bottles. 

CB: As a business we have undertaken a lot of work over the last few years to try and move more communication with clients online and via email. We have chilled filtered water and have spent money to buy a good coffee machine so as to reduce the use of disposable cups, plastic bottles and lids.

(Pictured above: Craig Brown, associate director and portfolio manager at Beckett Asset Management)

 

How are you incorporating ESG criteria into client portfolios?

AG: This criteria is incorporated via our choice of fund managers who offer consistent risk-adjusted returns but integrate a deep level of ESG analysis into their decision making. Often this involves a thematic approach or an ESG/sustainability matrix, so every company and holding is analysed against a myriad of factors which leads to an overall ESG or sustainability score. 

JL: As impact wealth managers, ESG criteria have been at the core of our investment philosophy since inception. ESG can be a good proxy for how well a company is being run: its operational efficiency. While how a company operates is important, we also need to recognise that what a company does is just as critical.

CQ: We focus on companies offering solutions to the global challenges of reducing carbon emissions, improving the food and water imbalances and reducing plastic waste, to mention just a few. Why? These are multi-decade growing themes driven by demographics, regulation and the need of a lower carbon footprint.

(Pictured above: Claudia Quiroz, investment director and lead investment manager for Quilter Cheviot’s Climate Assets Fund)

 

CB: ESG is the core focus of our Social Impact Portfolio which has now been running for just over two years. We believe that it is important to have a solution for those clients who wish to express a particular ethical or sustainable bias in their investments. We created an animated video which aims to dispel a number of the myths surrounding ESG investing, which has received good feedback.

What level of client demand for ESG investment are you seeing and how has this changed over the last five years?

AG: There are now over 600 advisers across the UK offering their clients Parmenion investment portfolios which
meet their ESG, sustainable or ethical objectives and this figure is increasing by 30-50 a quarter. Assets are also rapidly rising in line with wider market data with ESG/SRI AUM now over £220 million.

JL: Given that it’s baked into our investment process, we don’t have a single client portfolio whose assets don’t include ESG considerations. While our client base is a very broad church, within the families that we work with, it’s often the female and/or younger members who are leading these conversations and are passionate about what their wealth means to them.

(Pictured above: James Lawson, partner & co-founder of Tribe Impact Capital)

 

CQ: Investors are now taking a more holistic, inclusive approach to constructing portfolios; understanding what a company does and where, is equally important as understanding the company’s policies and systems to manage environmental, social and governance risks.

CB: ESG investing has seen a dramatic rise in interest over the last few years. We believe that part of this is down to efforts like ours in helping clients to understand that investing in line with your principles does not mean that you have to sacrifice return. We argue that investing with strong ESG principles can actually serve to enhance returns over the longer-term.

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