Business

The power of investing sustainably

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Peter McGahan

WHEN I was younger, I remember listening to a song which, every time I heard it thereafter, I learned more and more from. It is said when the pupil is ready, the teacher arrives.

“Accept certain inalienable truths: prices will rise, politicians will philander, you too will get old and when you do, you'll fantasise that when you were young, prices were reasonable, politicians were noble, and children respected their elders” (Wear Sunscreen by Baz Luhrmann).

In business school we are taught to put the customer first, to ensure our ‘why’ is forefront in our minds in everything, we do choice of staff, choice of communication. It does not seem that complicated.

Educate your customers and guide them through their financial life to give them every option possibly available to them.

I am not alone in seeing that big business doesn’t think that way in any shape or form, nor governments included.

Everything seems to be about squeezing that last few pence, creating unsustainable products that are out of date before they hit the shelves, and are set up to fail.

Corporate profit is the goal. Leave society’s issues, or the ‘planet problems’ to someone else. That wild force of corporate power has left the consumer with nothing but social media as a weapon to hold them accountable, the same social media used for such negative objectives.

The dice became loaded, and consumers tread on eggshells with their monopolised providers knowing they could lose the service they are complaining about.

Environmental Social and Governance (or ESG) investing has given huge power back to the public, and not at expense of their investment performance.

Facebook is facing the onslaught of advertisers dumping their advertising contracts.

Aiming to derail the $70 billion advert juggernaut, many advertisers have pulled advertising including North Face and Levi Strauss. But of the biggies, only three of the top 25 have actually followed the boycott – Microsoft, Starbucks & Pfizer.

Facebook’s chief executive's response was: “We’re not going to change our policies or approach on anything because of a threat to a small percent of our revenue, or to any per cent of our revenue.”

The market is seemingly following that view point with Facebook’s share price close to an all-time high, but that answer will serve only to redouble efforts for businesses and investors alike, just as the campaign ‘Stop Hate for Profit” moves in to hold the company accountable for benefitting from racism and misinformation.

ESG investing seeks to positively discriminate against such organisations and fits with the attitudes younger people have today about putting an end to wrong doing, whilst also protecting the universe they are a part of.

Once that gathers pace, it pushes household ‘norms’ of investors to the periphery of investment, share prices fall, investors leave and CEOs are sacked because they didn’t listen. Investors are making that point very clear.

Naturally, investors believe what they wish, but they invest, and want to work with people who believe truly, what they believe. That is branding. How do I look and feel next to brand ‘x’?

Do I personally use companies or ‘regimes’ with non-tax paying policies? Not in any way if I can help it.

A conscience is a great thing. ESG investors have that in abundance, and, whereas previous ‘Greenies’ could be tarred and feathered with ‘tree hugging’ branding, ESG investors are smart, and are here to stay.

Investors want their ducks in a row they want to clear their mind, sleep well and investments to fit their views, beliefs and passion. They want to regain control of those controlling them, and to know that by those organisations paying tax, society will have the correct circulation of capital to maintain sustainability.

Aghast at the ‘sponsored lobbying’ into global politics, this is their chance for a real democracy.

That is why the movement to ESG, and impact investing has gathered over 160 different exchange traded funds invested in ESG indices.

Most investors in ethical investments historically have had to give up returns. This no longer true and in fact, the ESG strategy is producing superior returns.

:: Peter McGahan is chief executive of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. Ask any financial question to Peter at 028 6863 2692, email info@wwfp.net or visit www.wwfp.net.

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