Earth Day falls on 22 April, with this year’s theme being the protection of our planet’s wildlife. We asked two wealth managers what their firms were doing to help this cause, as well as other issues surrounding ethical investing in the industry.
Louisiana Salge: impact specialist, EQ Investors
John David: investment director, Rathbone Greenbank
What is your firm – and the wider industry – doing to help protect animal welfare?
LS: The EQ Positive Impact Portfolios target companies that intentionally create positive impacts on society and the environment – and biodiversity conservation and animal welfare are such important impacts. For example, we hold companies that actively contribute to solutions to global overfishing of the seas. Growing global demand has led to unsustainable fishing and farming. Marine Harvest provides marine-cage farmed salmon and, unlike other seafood farms, has taken an ecosystem approach to ‘animal health’, including avoidance of pesticide use due to the successful introduction of ‘cleaning fish’ that feed on any fish lice.
(Pictured above, Louisiana Salge, impact specialist, EQ Investors)
JD: One of the factors that we consider at Rathbone Greenbank Investment is how companies are performing with regard to animal welfare. For example, we take into consideration a food producer’s policies and practices concerning welfare issues in the supply chain. Understanding these issues helps us identify sustainability leaders while avoiding companies that conflict with our clients’ values.
We can also help protect animal welfare through engagement with companies and policymakers. For example, we have helped file animal welfare-related resolutions to be voted on at company AGMs and have supported the Business Benchmark on Farm Animal Welfare since its launch in 2012.
We also have a long track record of active engagement on broader risks to the environment and natural habitats, such as deforestation and climate change..
What are the main concerns of your clients when they want to invest ethically?
LS: A common concern is that the investment universe available to the funds we target is too narrow and restrictive. Ultimately, some clients still hold the concern that this produces lower risk-return potentials; that a dual investment mandate necessitates some kind of financial performance sacrifice. However, the growing knowledge base, track records and media facilitating conversations on sustainable investments have started to shift people’s mind-sets. While impact investing has not reached the mainstream like ‘ESG investing’ has, we do see more and more clients realising they can do more with their investments without compromising on their financial return.
(Pictured above, John David, investment director, Rathbone Greenbank)
JD: As discretionary investment managers, we represent a broad spectrum of private client, advisers and charity investors. One unifying theme is the wish to invest in a way that meets the needs of the current generation without compromising the ability of future generations to meet their own needs, but there are subtleties between the approaches requested by each investor.
How can the industry help make ethical investing the mainstream choice for clients?
LS: We believe the lack of transparency in the investment sector is one key inhibitor of bringing impact investment into the mainstream. The opaque nature of traditional investment offerings drives a gap between a client and their investment’s ultimate impact – and thus investments are not viewed as having to be an extension of a client’s own values. In our experience, once a client gains visibility to the underlying holdings of their investments, especially to the positive and negative impacts of these companies, they are more likely to invest in line with their values.
JD: With the investment ‘mainstream’ now more alive to the potential investment benefits provided by the integration of ESG analysis into the research process, the challenge now is to bring greater clarity to the nature of the products on offer. Responsible investment ‘taxonomy’ is being addressed by several initiatives and we hope to see clearer definitions and standards around terms such as sustainable, impact or ethical investment. This will help improve the quality and range of investment offering and increase the trust of the investor.
This is vital if the nature of investment really is to change to the benefit of society and the environment in which we all live.