If you dig it up, sell it and profit from it...you are responsible for it
“If you dig it up, sell it and profit from it...you are responsible for it.”
Kate Mulvey, Union of Concerned Scientists.
With Kate’s quote in mind we wanted to take a deep dive into Ethical and Sustainable Investments, product ratings, how prevention works and how you can choose to put your funds into investments that match up with your beliefs about what’s good for you, the planet and society as well.
What’s best?
The ideal solution of course, is for businesses to integrate managing climate risk into their operations and business model, and transition to a low carbon economy. Businesses now need to think about sustainability as well as the more traditional factors affecting business competition if they’re wanting to continue to be profitable, and survive.
The below diagram Sustainable Business Model Innovation from BCG analysis illustrates this.
However it can be difficult to know how and who is doing it right!
It’s been a big couple of weeks for companies being put on notice to take their responsibilities seriously...
Sharma v Minister for the Environment found Australia’s Environment Minister has a duty of care to protect young people from climate change (this was in the instance of the Whitehaven Coal plans to expand Vickery mine)
An Australian judge has ordered Adani coalmine’s water plans back to the drawing board.
Major shareholder warnings for Big Oil to reduce its emissions (effecting Exxon, Shell and Chevron)
The Dutch Court has held Royal Dutch Shell itself liable for its contributions to climate change, claiming its operations undermined basic guaranteed human rights. (More on this from ABC Late Night Live here)
The International Energy Agency released its landmark report Net Zero by 2050, finding that there can be no investment in new fossil-fuel supply projects if the world wants to avert the worst of the climate catastrophe.
It is frustrating to know that many funds with ethical, sustainable or ESG offerings actually invest in companies which don’t act responsibly. It can be difficult to know how and who is doing it right!
How can you know?
There are many different approaches for you to consider...
Review ratings: FTSE Russell found that 6 major themes make the most difference to an ESG rating - climate change, environment supply chain, anti-corruption, labour standards, human rights and the social supply chain, however not all of these may be relevant.
Some fund managers have excluded particular companies from their holdings, as their investment policy means they can screen out, on the basis of poor governance and privacy concerns.
Transparency: In Australia, many (superannuation) funds don’t disclose their full lists of holdings, making it difficult for you to know what’s actually included in any green or ethical fund options.
And while ethical investment principles are very important, Super funds also have to do their best for you, by aiming for the highest possible financial returns.
What can you do?
Please check out any of the links we've shared above for further reading in the areas you’re particularly interested in. And feel free to contact us with any particular queries or concerns regarding ethical and sustainable investments.
To keep informed on what’s happening around the global with ethical and sustainable investments you can join our fortnightly newsletter Viva Insights by clicking on the SUBSCRIBE button in the righthand column.
Want to get ethical?
We’ll help assess your intended investment against your priorities. We’ll work through what ethical mean to you, and how the companies you’re interested in manage environmental, social and governance issues (ESG) in their business.
Get our Guide to Ethical Investment with everything you need to get started
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