Ethical funds outperform their traditional counterparts over 10 years and throughout the coronavirus pandemic, reveals a new report, as the UK government looks to phase out its financial support for fossil fuels overseas. Meanwhile, consumer goods giant Unilever commits to investing €1 billion in green projects, asset managers are accused of a ‘blind-spot’ over biodiversity loss and Google partners with wildlife charity WWF for a sustainable fashion platform. It’s the Good With Money weekly news brief.
Ethical investments outperform traditional funds over 10 years
Ethical funds have outperformed their traditional counterparts across the board over 10 years and throughout the coronavirus pandemic, reveals a new report.
Global research agency Morningstar examined 745 sustainable funds and compared them against 4,150 traditional funds. It found that they matched or beat returns in all categories – whether bonds or shares, and in the UK or abroad.
Over 10 years, the average annual return for a sustainable fund invested in large global companies has been 6.9 per cent a year, while a traditionally invested fund has made 6.3 per cent a year.
The report says: “Average returns and success rates for sustainable funds suggest that there is no performance trade-off associated with sustainable funds. In fact, a majority of sustainable funds have outperformed their traditional peers over multiple time horizons.”
It comes as environmentally focused investing becomes increasingly mainstream. This week, Vanguard, one of the world’s biggest fund managers, launched two ethical index funds aimed at UK investors, while Aviva, Britain’s biggest insurer, unveiled a ‘climate transition’ fund. Ethical investment platform Abundance also launched its first investment as part of a ‘Build Back Better’ initiative.
UK to phase out financial support for fossil fuels overseas
The UK government is looking to end its financial support for fossil fuels overseas after spending £3.5 billion on polluting projects since signing the Paris climate agreement.
Senior civil servants are planning a new climate strategy that would phase out financial support for oil and gas infrastructure in developing countries ahead of the UN’s COP26 climate talks in Glasgow next year.
The talks come amid growing outcry from MPs and campaign groups over the government’s continuing financial support for fossil fuel projects in Africa and south-east Asia through its foreign finance institutions.
Figures unearthed by campaign group Global Justice Now reveal that the government has offered billions of pounds-worth of overseas fossil fuel financing since the Paris Climate Accord was agreed in 2016. It has also forged close links with the fossil fuel industry through a series of hospitality events and gifts.
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Unilever to invest €1bn in green projects
Unilever has pledged to invest €1 billion (£900 million) over the next decade in environmental projects that will improve the “health of the planet”.
The consumer goods giant – which owns more than 400 brands including Marmite, Dove, Comfort and Sure – said that in response to the “scale and urgency of the climate crisis”, it is also committing to reach net-zero emissions by 2039.
Alan Jope, Unilever’s chief executive, said that while the world was rightly focused on the devastating coronavirus outbreak and serious issues of inequality raised by the Black Lives Matter protests, the climate emergency should not be overlooked.
He said: “We can’t let ourselves forget that the climate crisis is still a threat to all of us.”
The company has already promised to reduce the mountain of plastic rubbish that its products generate, but Jope said it was just as important to look at the “impact they have on the planet at the start of their life” – in the sourcing of materials, as well as in their manufacture and transport.
Asset managers have ‘blind-spot’ over biodiversity loss
Asset managers are “blind” to the threat to their portfolios of global biodiversity loss, according to two new major reports.
The data from responsible investment campaign group ShareAction reveals that none of the world’s 75 largest asset managers has a dedicated policy on biodiversity, while 39 per cent still make no mention of climate change in their investment policies.
And only 11 per cent of asset managers have policies requiring portfolio companies to mitigate harmful impacts on biodiversity.
While growing numbers have moved to divest from carbon intensive firms or strengthen investment criteria, 84 per cent of the world’s largest asset managers have no policies to exclude coal companies from their investment portfolios, and 93 per cent have no policies prohibiting investment in tar sands.
Google and WWF to partner for sustainable fashion platform
Google is to partner with conservation charity WWF Sweden to create an environmental data platform that will enable more responsible sourcing decisions in the fashion industry.
The joint project aims to create a platform that allows fashion brands to monitor the environmental impact of their supply chains and adapt accordingly to support green initiatives.
The fashion industry has a major environmental impact globally. The World Bank predicts that 20 per cent of industrial wastewater pollution worldwide is contributed by the textile industry. The washing of textiles, which releases plastic microfibers into the ocean, is estimated to accumulate to an excess of 22 million tonnes between 2015 and 2050.
A report by Quantis, meanwhile, revealed that the fashion industry accounts for two to eight per cent of greenhouse gas emissions globally and could reach up to 50 per cent by 2030 unless action is taken.
The two companies are looking to access untapped data to help fashion brands evaluate the impact of their decisions.
Leveraging Google’s data-crunching power and WWF’s knowledge of raw materials assessment, the program will focus on cotton and viscose initially and soon expand to other varieties of raw materials.