Interest in sustainable investment has risen dramatically in recent years. But how do everyday investors know if a fund labelled as “sustainable” is genuinely making a positive difference with their money – or is simply cashing in on the hype?
John Fleetwood, a consultant in sustainable investing, has picked out eight funds that are leading the way in this field and have clear social and environmental impact reporting (in other words, they’re walking the talk!).
WHEB is a specialist fund manager wholly-focussed on creating a positive impact through investing. Its team are true pioneers in the industry.
The firm’s flagship FP WHEB Sustainability Fund invests in five environmental themes (resource efficiency, cleaner energy, environmental services, sustainable transport, water management) and four social themes (health, safety, wellbeing and education), which it defines as providing a ‘solution to a sustainability challenge’.
WHEB believes that by focusing on the companies providing solutions to urgent social and environmental issues, the fund can deliver superior performance for investors.
Columbia Threadneedle (CT) is a global asset manager with a team of 2,700 people across the world, looking after more than £489 million in assets. Responsible investing is at the heart of its approach, it says, as “effective stewardship benefits companies, investors and the economy as a whole.”
The pioneering CT Social Bond Fund aims for both financial returns and high positive social impact. It invests in bonds (loan agreements) that help to meet pressing social needs, mostly in the UK. For this fund, CT has partnered with Big Issue Invest to ensure that social impact considerations are a key part of the investment decision-making process.
A world leader in wealth management (it holds more than £126 billion in assets), Union Bancaire Privée (UBP) says the financial sector has an essential role to play in tackling the world’s social and environmental challenges. It is leading by example, with a commitment to actively seeking out and developing innovative sustainable investments.
In 2021, UBP launched the UBAM Biodiversity Restoration Fund, which invests in businesses that are enhancing the protection and restoration of the natural world. The fund invests in companies that are reducing biodiversity loss through their core activities, and those with huge supply chains that are taking their impact on biodiversity seriously.
Meanwhile, it’s UBAM Positive Impact Equity Fund focuses on companies which, through their revenue streams, help to solve the world’s most pressing problems such as scarce resources, climate change, and poverty.
Impax Asset Management, founded in 1998, has pioneered investment in the transition to a more sustainable global economy and is one of the largest investment managers dedicated to this area.
Launched in 2002, Impax Environmental Markets plc is now the UK’s largest environmental investment trust (an investment trust is a company that is listed on the stock exchange to buy shares in other companies on behalf of its investors).
The trust invests in environmental markets and resource efficiency across energy, water, waste, and food and agriculture. It invests in solutions to themes such as growing populations, increasing urbanisation, rising consumption, and the depletion of limited natural resources.
EdenTree is a London-based investment manager specialising in responsible and sustainable investments.
EdenTree’s Green Future Fund primarily invests in shares of global companies whose core products and services address global sustainability challenges, with a particular focus on the environment. Its Global Impact Bond Fund aims invests in bonds issued by companies that make a positive contribution to society and the environment through sustainable and socially responsible practices.
Baillie Gifford has remained a privately-owned partnership, based in Edinburgh, for more than a century. This means it doesn’t face pressure from external shareholders interested in short-term profits. It has more than 1,100 employees and manages around £268 billion in assets.
Baillie Gifford’s Positive Change fund seeks out companies that can deliver positive change in one of four areas: social inclusion and education, environment and resource needs, healthcare and quality of life; and the so-called ‘base of the pyramid’ (addressing the needs of the world’s poorest populations).
Regnan has a long, proud heritage in providing advice and insights on environmental, social and governance (ESG) issues. Its four-person impact investment team “aims to generate long-term outperformance by investing in mission-driven companies that provide solutions for the growing unmet sustainability needs of society and the environment”.
The Regnan Global Equity Impact Solutions Fund puts a strong emphasis on driving impact through engagement with the companies it invests in.
Wellington Management, which looks after £800 billion in assets, specialises in sustainable and impact investing.
The Wellington Global Impact Fund invests in companies that are focused on reducing inequality and mitigating the effects of climate change. In 2021, the asset manager’s investments in the Global Impact Fund helped generate enough renewable electricity to power 16 million homes, helped enable digital access to 1.6 billion people in developing countries, and helped supply or finance more than 14 million units of affordable housing, amongst other achievements.