ESG funds to overtake rivals as ‘nature in crisis’

Written by Lori Campbell on 19th Oct 2020

Assets held in sustainable funds in Europe are forecast to triple by 2025, overtaking traditional funds for the first time, as a government report into biodiversity loss finds “nature is in crisis right now.” Meanwhile, the UK’s biggest asset manager, Legal and General Investment Management, warns 500 companies to do more to tackle climate change or risk being publicly named and shamed, the Woodland Trust pledges to to plant 50 million trees by 2025 and a study finds the Great Barrier Reef has lost half of its corals since 1995. It’s the Good With Money weekly news brief. 

ESG funds to outnumber conventional funds by 2025

Assets held in sustainable funds in Europe will outnumber those in traditional funds in the next five years, according to a new report.

According to the research by PwC, funds that invest using environmental, social and governance (ESG) factors are on course to experience a threefold jump in assets by 2025. This will take their value to €7.6 trillion (£6.89 trillion), increasing their share of the European fund sector from 15 per cent to a massive 57 per cent.

ESG investing, which aims to look beyond traditional financial metrics when picking stocks, previously represented a niche area of fund management. But these strategies are being pushed firmly into the mainstream by investors’ increasing focus on risks including climate change and social inequality.

The shift could have big implications for companies across Europe by redirecting capital into sustainable activities and forcing businesses to be transparent about everything from their environmental impact to how they treat employees.

However, it could also expose investors to potential greenwashing, as fund managers make exaggerated claims about their ESG credentials in an attempt to muscle in on the market.


Key rules for avoiding greenwash (in a world of coronavirus)


“Nature is in crisis right now,” finds government report on biodiversity

A new government report into the action being taken to fight biodiversity loss in the UK warns that “nature is in crisis right now – and reveals a shocking hole in the finances available to restore and preserve ecosystems.

Using 24 key biodiversity indicators, the report found 14 are in long-term decline, including UK habitats of European importance, the abundance and distribution of priority species, farmland and woodland birds, and fish size classes in the North Sea.

The report also reveals just 0.02 per cent of UK GDP now goes towards funding biodiversity after cuts in public sector investment in conservation amounted to a real-terms fall of 33 per cent in just five years.

Dr Richard Benwell, chief executive of the Wildlife and Countryside Link – an umbrella organisation comprised of institutions including the National Trust, RSPB, the Marine Conservation Society, Greenpeace, and Friends of the Earth – said funding cuts had resulted in “relentlessly bad results for habitats and species”.

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UK’s biggest asset manager warns 500 companies on climate change

Legal and General Investment Management is to warn 500 companies to do more to tackle climate change or risk being publicly named and shamed.

The move is an escalation of a long-running environmental campaign by the UK’s largest asset manager. The £700 billion fund house has created publicly available climate ratings for more than 1,000 companies, a more than 10-fold increase in the number of targets since it started pushing its global warming engagement campaign in 2016.

When companies fall short of meeting its minimum standards, including lacking comprehensive disclosure of emissions or key sustainability certifications, LGIM said it would use its vote at annual meetings or potentially sell out of the stocks in some funds. It is also calling for companies to set “net zero” targets to reduce carbon emissions.


Find out how to invest to make a difference in The Good Guide to Impact Investing 2020


Woodland Trust to plant 50m trees by 2025 to fight climate crisis

A conservation charity has pledged to plant 50 million trees by 2025 to help tackle climate change.

The Woodland Trust is also urging millions of people to join its ‘big climate fightback’ by planting trees this November to boost the biggest mass planting campaign the UK has ever seen.

The efforts come in the face of the impacts of Covid-19, with tree planting rates falling despite the need to increase woodland cover to store carbon and tackle the climate crisis.

As part of the push, the Woodland Trust is sending more than 600,000 free trees to community groups and schools over the next few weeks.

It is also announcing a new ’emergency tree fund’ worth up to £1 million to support local authorities to plant trees and create woods, which will be piloted with 12 councils and rolled out further if successful. In the big climate fightback, which is supported by players of People’s Postcode Lottery, people are being urged to plant trees, or if they cannot do that, they can take action such as lobbying MPs and donating money to the campaign.


How to cut your carbon footprint in HALF


Great Barrier Reef has lost half of its corals since 1995

Australia’s Great Barrier Reef has lost more than half of its corals since 1995 due to climate change, a new study has found.

Scientists found that all types of corals had suffered a decline across the world’s largest reef system. The steepest falls came after mass bleaching events in 2016 and 2017. More mass bleaching occurred this year.

“There is no time to lose – we must sharply decrease greenhouse gas emissions ASAP,” the researchers warn.

The study, published in the journal Proceedings of the Royal Society B, was conducted by marine scientists at the ARC Centre of Excellence for Coral Reef Studies in Queensland.

Scientists assessed the health and size of coral colonies across the reef from 1995 to 2017.