Introducing Sustainable Investing

This blog does not constitute Investment Research as defined in COBS 12.2.17 of the FCA’s Handbook of Rules and Guidance (“FCA Rules”). See the end of this blog for links to important information and disclaimers.

Why Sustainable Investing ?

Delivering Net Zero and a greener economy isn’t just an imperative for society, it’s also the premier investment opportunity of our time.


 

We recognise that avoiding climate disaster is the greatest challenge of our generation & we must be part of the solution

  • Current trajectory is ruinous. A 3° global temperature increase will raise the seas, cause more frequent, costly & deadly natural disasters, lead to food/water scarcity for half a billion people, make major cities in the equatorial band unlivable & drive hundreds of millions to migration. Global GDP impact could be >25% by 2100.
  • This is already impacting every aspect of our world. Severe weather events have tripled in the last decade & insured losses have risen 8-fold. More than a quarter of our world has experienced moderate to severe land degradation.
  • And it’s driving existential changes in our industry. ESG/values assets in ’20 surpassed 20% of total AUM in the US. Global values assets increased by 150%. Asset owners & managers with more than $40trn AUM are actively supporting net zero 2050.

We believe the greening of our economy can also be the most profitable investment opportunity any of us have ever seen.

  • Our work: $120Trillion in necessary investments ~ one quarter of all capex FOR THIRTY YEARS.
  • Outsized returns will accrue to companies that contribute to the solution – many with new business models, & nascent technologies.
  • We’re comfortable working with new and deep trends – it’s what we like most about thematic investing & we’ve been at it for 20 years.

 


Albert Hyseni from unsplash

We think new skills are necessary: sustainable investing is vexingly complex – there is no simple algorithm.

  • Demographics, technology, regulation, politics & societal attitudes will determine which pathways are investable.
  • Forecasting becomes substantially more difficult when the future looks very different from the past.
  • There is no perfect solution. Understanding the many trade-offs & time-frames of NZ50 is key.
  • Together we have a unique skillset from having worked as civil engineers, consultants, investors, bankers & brokers.

We see tremendous risks too. There will negative returns in many legacy industries & mis-allocated capital in some new arenas.

  • Companies will be forced to shoulder the entire cost of their impacts & adapt to new rules. Those that fail to evolve risk stranded assets & diminished returns at best.
  • Moving regulatory & policy goal posts are further complexifiers for long term investors.
  • Having worked through the internet bubble, the German solar bust & the Asian debt crisis, we’ve seen how hope/FOMO can overcome rational analysis.

Charles Forerunner unsplash

We know asset owners & managers have a central role & want to work towards a solution to climate disaster.

  • This time it’s different. Our clients are increasingly involved in engaging with companies to drive real change.
  • Their challenges are real: providing a competitive return while aligning their portfolios with values.
  • And it’s something we understand from having walked in their shoes & having been part of their industry since the mid 90s.

And we believe strongly we can support them.

  • We are committed – leaving our previous careers behind & focusing solely sustainable investing.
  • We are putting our skills, values and diverse backgrounds to use – backed by 75 years of experience.
  • We have the right balance of expertise – theme and valuation experience, a long term investing focus and a passion for sustainability.
  • We are independent, work exclusively for our clients and don’t do corporate deals -it’s only way to avoid conflicts of interest.

 

Sustainable Investing LLP is an appointed representative of Varramore Partners Limited which is authorised and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom (“UK”). Sustainable Investing’s FCA Firm Reference Number is 946165.

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