In my post of 12 April 2020 (How long is this sustainable for?) I promised a series of mini-blogs to highlight stories about companies that see the link between the sustainability of their business and that of the planet. I’m giving myself free rein here to look at anything from what big, grown-up companies are doing to get with the programme, to young, earnest start-ups with ground-breaking ideas – and all that comes in between. Happy reading!
A sustainable story for today: a new kind of plastic
This first one is no more than a snippet about an idea that is still in the development stage. I’ve chosen it because it’s one that inspires hope and shows how taking an interest in sustainable investing is about so much more than finance.
A joint project between Osaka University and a large Japanese company that makes products out of corn (yeah, I’m not entirely sure what they might be, either) has developed a new kind of plastic that can break down in seawater in 30 days. Apparently, it’s made of cassava starch and wood pulp and is reported to be twice as strong as oil-based plastic. Cool.
Celebrating Earth Day
I thought this a fitting nugget in a week that held Earth Day in its middle. Earth Day is a self-styled celebration of the activists and scientists seeking to limit the damage we do to our globe. I have to admit, I was ignorant of its existence until last Wednesday, when everyone and its turtle was keen to draw attention to it. After 50 years, and in the midst of a global pandemic that is driving a desire to balance out the bad news with some good, Earth Day finally had its ‘day’!
Alarmed by bleached coral and plastic waste
The Economist marked it by reposting a podcast from last month with national treasure Sir David Attenborough. In it he talked of the first “signs of alarm” that he remembers from his diving days in the 1960s when he saw how swathes of our ocean’s coral reefs had been bleached. Many decades and studies later, we now know that such damage is caused by the stress of a change in temperature in the sea water. Experts in this area have also flagged the damage that the plastic waste in our waters is doing to these eco-systems – causing wounds in the coral that allow infection in and blocking light out, so stunting growth. Coral reefs aside, I think we have all felt alarmed by images of the 8 million tonnes of plastic that are dumped each year into the oceans – alarmed and, at the same time, powerless.
“People won’t care about things they don’t know…”
It’s these strong emotions that make us likely to engage with a story about a new kind of plastic. We are all looking for hope at the moment and the very fact that there is research going into products like these reminds us that companies and people around the globe can be part of the solution to our many problems. As Sir David himself put it: ““People won’t care about things that they don’t know about and have never seen”. I think this goes for the good things as well as the bad.
24 April 2020 firstname.lastname@example.org
All opinions are those of Carole Haswell and do not constitute financial advice
Talking Finances With Women
I’ve a feeling that there is going to be a whole lot of marketing aimed at women around sustainable investing. As ever, there will be a gulf between the promotions coming from on high and the position of non-investors on the ground with questions like: Is this for me, how does it work and why might I need it? This is where I think financial advisers, planners and commentators can all step up, but I also believe it will be stories like these that get us interested in the first place. If you are inspired to take this further, please see ‘A bit more understanding’ below.
A bit more understanding
These Sustainable Investment mini blogs are not about providing investment tips. The point is to flag to you the sort of projects that professionals who invest sustainably keep an eye on. Generally speaking, ordinary folk investing on their own behalf would not be encouraged to invest directly in companies, but to use funds made up of a number of different companies. This way, we can pool our resources and spread out our risk.
The professionals who manage these funds (imaginatively known as fund managers) have exams coming out of their ears and do tonnes of research into the companies they invest in so that you don’t have to. After all, you wouldn’t want to bet your house on a single company that is doing great things as its core business only to find out that it has a side hustle in selling pandas into slavery.
You can think of different kinds of funds like Russian dolls, starting with the ‘company’ at the centre:
1. The company – an investment in a company could be shares that pay dividends and go up or down in value; or a bond where the company ‘borrows’ money for a set amount of time in return for a fixed amount of income
2. A fund (aka collective investments such as a unit trust, OEIC or investment trust) – a fund manager chooses the companies they want in their fund. A sustainable investment fund manager would invest in companies that tick the right boxes on environmental, social and governance (ESG) matters
3. Multi-manager fund – this is another layer of management that puts together a number of funds as a single fund. In a sustainable investment multi-manager fund, the funds chosen would be investing in companies that meet ESG principles
4. Managed portfolio – a financial adviser or investment manager can put together a collection of funds to suit a particular level of risk and investment preferences (such as sustainable). Unlike the multi-manager funds, the client holds a number of funds, not just one – you would generally seek financial advice for this sort of investment. The manager would make changes to the portfolio (ie switch in or out of funds) either after consulting with the client (called ‘advised’) or at their discretion (called ‘discretionary’)
The funds and portfolios on offer within sustainable investing are growing. Advisers, planners and other financial professionals will be learning about the options available as we go along. If you are new to investing, a good place to start is https://www.moneysavingexpert.com/savings/investment-beginners/ or https://www.moneyadviceservice.org.uk/en/categories/how-to-invest-money. Here you will find helpful guidance and suggested websites where you can do your own investing. More information on the sustainable options is also provided.
Alternatively, please feel free to talk to us about your circumstances at Talking Finances.