Why investors should care about COP27

For the past two weeks, world leaders and decision makers have gathered in Sharm El Sheikh, Egypt for the United Nation’s annual climate change conference: COP27.

The hope is that it will build on the momentum of COP26, which took place in Glasgow last year, and that nations will demonstrate that they are turning their commitments into action.

While setbacks have been highlighted due to a ‘year of climate procrastination’, some progress has been made. For example, US President Joe Biden and Chinese leader Xi Jinping have agreed to resume cooperation on climate change. The European Union has also updated its climate pledges with plans to cut emissions by 57 per cent by 2030.

Why should investors care

How does all this affect investors? Well, the reality is that every company – and every investment fund – will be influenced to some degree by the environmental agenda.

Even the most unenthusiastic executives need to accept the increasingly stringent rules that are being brought in to deal with the climate crisis and the reputational risk of ignoring environmental concerns.

On the positive side, it’s hoped that investors can also make a profit by investing their money into ‘green funds’ focused on both generating returns and helping the planet.

Neil Goddin, manager of Artemis Positive Future fund, told us more about how investors can benefit from a cleaner, greener approach, in this video interview:

Four funds for responsible investors

Luckily, there is more and more choice for environmentally friendly investors today.  Whether you are primarily concerned about decarbonisation, ecologically sensitive operations, better resource efficiency or simply getting companies to adhere to better practice, there is an option for you.

Here, we’ve picked four Elite Rated funds, each with a slightly different focus, that are worth considering. Each of them boasts experienced management teams at the helm that are well versed in eco issues.

You can research all our Elite Rated Responsible Investing funds here.

The Ninety One Global Environment fund only invests in companies that are contributing to the decarbonisation of the world economy. Launched in December 2019, this global equity fund has a unique approach and not only would you be investing for a better future for yourself, but also for the planet. The portfolio has complete conviction, with just 20-40 holdings.

The managers of CT Responsible Global Equity have the help of an independent sustainability team to ensure standards are maintained and backed-up by strong engagement with company management post-investment. Constraints include no alcohol, gambling, pornography, weapons or tobacco, and the fund is fossil fuel free. There are also restrictions on environmental impact (with particular consideration to the Arctic & ecologically sensitive operations), animal welfare, human rights, and labour standards.

The LF Montanaro Better World fund invests in medium and small sized businesses and has a simple philosophy; invest in companies you can understand, buy things which are growing, back quality management, engage with your companies and don’t over trade. It also has six impact themes: environmental protection, the green economy, healthcare, innovative technologies, nutrition, and well-being.

Liontrust Sustainable Future Managed fund invests in a combination of global equities, bonds, and cash. The managers use a thematic approach to identify the key structural growth trends that will shape the global economy of the future, across a 40-60 stock portfolio. The team has identified three mega trends with strong and dependable growth prospects. These are better resource efficiency (cleaner), improved health (healthier) and greater safety and resilience (safer).

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.