WHEB throws down gauntlet to “backwards-looking” funds

Written by Rebecca O'Connor on 24th May 2017

WHEB, the sustainable asset manager, has challenged the investment industry to “stop measuring risk relative to backwards-looking benchmarks and instead build portfolios on forward-looking scenarios.”

As impact investing continues to grow worldwide, the B Corp-certified fund manager, one of the first in the world to report against a new set of global guidelines for the financial industry to help the transition to a low carbon world, shows in its latest annual impact report how its investments “directly support the attainment of seven UN Sustainable Development Goals (SDGs).”

Seb Beloe, head of research at WHEB, said: “We believe that one of the key challenges for investors is identifying frameworks that stop measuring risk relative to backwards-looking benchmarks and instead build portfolios based on forward-looking scenarios.”

He added that the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) led by Mark Carney and Michael Bloomberg, and the UN Sustainable Development Goals (SDGs), could underpin this kind of longer term decision-making.

“Increasing resource scarcity, ageing populations, as well as on-going urbanisation and rising living standards have played an increasingly central role in shaping the global economy”

Launching the report, George Latham, managing partner and chief investment officer said: “Investors of all types are increasingly interested in the purpose of their investments, and understanding the impact their investments have on the world. The WHEB Fund is solely focused on companies providing solutions to sustainability challenges and this report builds on WHEB’s leadership in measuring and communicating the extent of this positive impact. We would encourage all investors, from the largest pension fund to the individual investor, to ask their advisers and asset managers for information on the impact of their investments.”

The asset manager has identified nine investment themes and invests in companies that it believes offer the best solutions to the challenges in each:

  • Resource efficiency
  • Water management
  • Sustainable transport
  • Education
  • Wellbeing
  • Health
  • Safety
  • Cleaner energy
  • Environmental services

“Increasing resource scarcity, ageing populations, as well as on-going urbanisation and rising living standards have played an increasingly central role in shaping the global economy”, the report says “It is our conviction that these trends will continue to persist for many decades. In the process, they are creating real market opportunities for companies providing solutions to mitigate or ease the challenges that these forces create.”

The FP WHEB Sustainability Fund only invests in companies providing solutions to sustainability challenges. In the report, WHEB, formerly run by Ben Goldsmith, demonstrates that investing £1 million in the fund in 2016 generated the following outcomes:

•       1,200 MWh of renewable energy was generated;
•       1,600 tonnes of CO2e was avoided;
•       1.6m litres of waste water was treated;
•       30m litres of drinking water was provided; and,
•       140 tonnes of waste material was recycled or recovered.

The report gives details of how WHEB’s role as an active shareholder can generate positive results. It said it engaged with 70 per cent of the companies held in the fund during the year and judged 58 per cent of these engagements to be either successful or partially successful.

Mr Beloe said: “Over the past three years WHEB has developed increasingly sophisticated tools to measure the actual positive environmental and social outcomes generated by the FP WHEB Sustainability Fund’s investments. Our approach connects savers who have money in the fund with the real-world impact of their investments. Investing can have a positive purpose, generating investment returns by helping to build a better future.”

Impact investing now accounts for some $100-$150 billion of assets under management globally and is doubling approximately every couple of years.

 

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