Given the opportunity set in front of advisers during the next transfer of generational wealth, now may be the time to reassess the role of responsible investing and the importance of being an ethical steward for capital.
The net-zero transition will bring about an economic transformation, with massive up-front investment leading to near-zero energy costs in the near future, ClearBridge Investments’ Nick Langley told industry leaders at The Inside Network’s ESG Retreat. But big challenges remain, with no easy answers.
Institutional investment teams may still oscillate between engagement and divestment as their first choice in leverage with large emitting companies, but one thing is certain – they are all looking at ways to hold these groups accountable for their activities and behaviours.
To achieve the widespread adoption of green hydrogen necessary to reach net zero targets and for the companies in that sector to achieve their full potential, we are eventually going to need a high carbon price. And that looks still to be some way off.
“The portfolio does look different to mainstream,” says Australian Ethical portfolio manager and equity analyst Deana Mitchell, before explaining how the fund manager tilts up and down to meet its ethical charter.
Sam Elsom, Mr Seaweed and the rest of the Sea Forest team are unlocking the power of asparagopsis to reduce methane emissions in a spectacular way. The plan has caught the attention of Prince William and Caroline Kennedy, but remains bogged down by governmental process.
“Rational, economic arguments” are required to support a reduction of the costs of global warming on the planet and the economy, says Australian Ethical.
Despite being buffeted by some serious headwinds, the sustainable investment movement shows no sign of slowing down in Australia.
Meeting the Paris-aligned guidelines can be problematic for Australia’s big investors, but it’s possible to deliver compliant investment strategies with modest tracking error budgets using a layered approach according to one investment group.
Marketing ESG credentials could be greenwashing even if correctly disclosed, according to Zenith, but going “dark” on disclosure isn’t an option either.
Investing in quality takes patience, as does investing sustainably. The convergence plays well for those looking to build a portfolio with ESG parameters, something Australian Ethical believes will benefit from net-zero tailwinds in the future.
Eighteen months ago, the fund started by former US banker David Di Pilla announced its target to achieve net-zero for scope 1 and scope 2 emissions by FY28. Alongside this came an energy road map and the first phase of its ‘Energy Management System’, which was subsequently rolled out across 18 sites.