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Last year, we asked eight Elite Rated managers, with ESG at the heart of their process, whether they thought the E, S or G would dominate in 2021. Six of the eight cited the ’S’ (social) as a key focus. This year, we decided to survey our readers to see if their concerns aligned.
When asked to rank E, S and G in order of importance, social fell last with only 9%* claiming it was a primary concern. Instead, when asked to select the issues most important to them, climate change and pollution were the runaway leaders. Bottom of the pack was resource scarcity at 8%* and diversity at 13%*. But what did millennials in particular have to say about it..?
“The key to understanding the future is one word: sustainability.” — Patrick Dixon, Chairman of Global Change Ltd
Among the millennials surveyed, 75%** included ‘human rights’ in their top 5 biggest concerns, making it a higher concern than both climate change and pollution. Interestingly 50%** of millennials also cited biodiversity as a concern (compared to 28%* of older respondents). As with older respondents, resource scarcity was also at the bottom of the table, with only 1%** concerned. I’ll just leave this here: the reality of water scarcity…
Of those who completed our survey 68%* of investors have already put some money into funds that invest responsibly and 63%* are either very likely or likely to do so in the future. Within that, 83%* of millennials have already invested in ESG funds. So let’s see where they’ve invested:
Sarah wants some sustainable holdings but doesn’t know what to look for as ‘good practice.’ She’s identified climate change as her key concern and ultimately invests in Ninety One Global Environment. The fund has a clear mandate to invest for decarbonisation and companies will also have to have at least 50% of their revenues from three sectors: renewable energy; efficient use of resources, and electrification.
Driven by personal values, Richard has a fully ethical ISA portfolio comprised of BMO Responsible Global Equity, Rathbone Greenbank Global Sustainability and Ninety One Global Environment. The BMO fund uses an independent sustainability team to ensure standards are maintained, which he believes is good practice and allows for more conviction with their decisions.
Rebecca, who works in the private charity sector, is interested in ethical investment options for her ISA, but is put off by the terminology used to describe it. She could consider Artemis Positive Future – this fund looks for companies making a material positive impact on the world through either environmental or social improvements.
A long-term investor in the Liontrust Sustainable Future Managed fund, Chris identified climate change, pollution and clean energy as his top concerns when choosing his investments. The Liontrust Sustainable Future range uses a thematic approach to invest in cleaner, healthier and safer outcomes addressing his top concerns.
Although not yet invested in sustainable funds, Lara identified a fully social list of concerns including equality, company ethics, diversity and human rights. It’s important to her that her investments are involved in active engagement and wouldn’t be put off by funds looking to make improvements with their holdings. A fund that might fit the bill is EdenTree Responsible & Sustainable UK Equity, which has a long history of engaging with companies.
The biggest issue to Tom was corruption. For Tom, corruption encompassing a whole range of other issues like human rights, pollution, executive pay and diversity, making it the root cause for concern. One of the issues he believes is how funds report this type of engagement and social values back to investors. Tom and his partner are currently invested in both LF Montanaro Better World and Liontrust Sustainable Future Global Growth.
*Survey of FundCalibre readers, 73 respondents
**Survey of FundCalibre readers, segmented by age 25-40