Setting Sustainable Investment Goals – Money Marketing
Capitalism has lifted hundreds of millions of people out of poverty over the past 200 years. While you can’t dispute the huge leap in living standards, profit has often come at a cost to people and the planet. But more and more capitalists are paying more attention to these costs. That’s why it’s such a hopeful time to manage money in the age of responsible investing. There is a whole wave of people who have the opportunity to exploit the good that investment can do, while trying to eliminate the bad.
We spent over a year designing our line of sustainable multi-asset funds because we wanted to make sure we offered something that would focus on owning those companies that are really trying to do good by people and who make the world a better place. , but without compromising on financial goals.
Do just the right thing
Our sustainable multi-asset funds only invest in companies whose operations generate decent profits while supporting the United Nations Sustainable Development Goals. These 17 goals make sense and can be summed up in one theme: caring for people and the planet. Treat employees and communities well, reduce poverty and protect the planet so we all have healthier homes. We wanted to create funds for people who want their investments to contribute to a better world, but also need their investments to grow, to pay for their retirement and their children’s university fees.
To achieve these goals, we need to talk to the companies we invest in and get to know them. We bring the same constructive skepticism to our sustainability goals that we use to assess the prospects for business performance. We try to focus on those who can point to facts and results regarding diversity, environmental impact and supply chains. We’re in awe of the honest, unvarnished transparency about companies and the credible strategies for doing the right thing, all backed by evidence, rather than a perfect story that belies the truth.
Better products, better practices
Take Trex, an American composite decking company that we added to our fund at launch. Composite decks use over 90% recycled material, but look almost identical to wood. Trex beats wood decks hands down: the amount of greenhouse gases and air pollutants is roughly halved compared to treated wood products, and the amount of acidification and ecological toxicity is reduced by approximately 90%. Trex lasts a lot longer too. Composite penetration in its main US market is still relatively low at around 20%, so there are a lot of customers to convert. We have been positive about the US real estate cycle for some time and believe that spending on these type of DIY products is likely to continue to rise for some time.
Another asset is the Japanese manufacturer of electric motors Nidec. These motors are used everywhere, from shock-resistant cooling fans for computer hard drives, to wind turbine motors (which help them stop), and automobiles and electric bicycles and scooters (help them to go). The pandemic has catalyzed change in vehicle electrification and renewable energy production to a staggering degree. Renewable energies accounted for 80% of the entire new generation in 2020. Nidec is also expected to benefit from increased industrial production, warehouse activity and general economic growth as its engines enter forklifts, cars and other machinery that businesses and households tend to buy more. when things are going well. Especially if people take the opportunity to switch to cleaner energy alternatives. Nidec’s electric motors are more efficient, which would mean less energy for the same efficiency and lower overall costs.
Then there’s the Canadian e-commerce platform Shopify. This carbon neutral company is popular among small and medium businesses, offering a complete white label digital sales system, from website design and hosting to payment, shipping and after-sales service. It also helps in other ways. It offers free entrepreneurship and marketing classes for adults, free coding classes for kids, and commits millions of dollars each year to its own sustainability fund to fight climate change. Over the past few years, there has been a trend towards quirky or local shopping: stores are on the rise and Shopify is helping them give them a boost. It accelerated during the pandemic. As more people work from home, small suburban retailers are taking advantage of the fragmented foot traffic that would normally be sucked into larger centers. Shopify offers a decent way to expose yourself to this if this continues.
All of these companies can prove that they are doing the right thing, and they all have strong investment records as well. We collaborate with businesses, carry out our own investigations and, if necessary, strongly challenge them.
Will McIntosh-Whyte is the Fund Manager of Rathbone Greenbank Multi-Asset Portfolios