The Investment Week Sustainable Investment Conference and Awards has become an annual fixture for Ayres Punchard, providing valuable and often ground-breaking insight into the developing world of sustainable investment.
In 2014, Chris Welsford delivered the Keynote presentation for the conference, arguing that NGO’s and protest groups such as Greenpeace and Friends of the Earth should be listened to more seriously by fund managers purporting to invest their client’s money ethically, supporting environmental objectives.
Traditionally, the world of high finance and professional investment has existed in a bubble, motivated solely by money, placing profit at the center of its being, leaving any other considerations to be dealt with separately.
Climate change and, perhaps more directly, air pollution have changed things considerably, and there is now a growing recognition that no area of economic activity operates in isolation, with companies worldwide being challenged both legally and politically to account for their environmental impact, which can lead to financial implications for the investors.
On top of this, there are serious health concerns for us all – including the fund managers working in London, breathing the city’s polluted air – and regarding climate change and pollution as threatening the very existence of our planet is no longer considered a ‘radical’ belief.
At this year’s conference, there was a complete acceptance in every presentation of the need to accept climate change in terms articulated by NGO’s and protest groups.
The need to understand the environmental impact of our investment choices is now almost universally accepted, although some delegates were interested to understand the evidence for financial betterment as a result of adopting ESG in investment analysis.
But there is already considerable evidence to show that investing in companies with good Environmental, Social and Governance credentials leads to better long term financial returns.
In 2014, Arabesque Asset Managers – in conjunction with Oxford University’s Smith Sustainable Business School – commissioned and published a report about ESG and its financial impact on returns, and after reviewing over 200 academic studies, reports and published articles, it concluded that good ESG factors provide enhanced returns in the long term and delivers more sustainable returns.
At this year’s Sustainable Investment Awards, Ayres Punchard were co-judges of the best of the “Best ESG Fund” category, for which Arabesque Asset Managers’ Systematique Fund was unanimously awarded the first prize.
The fund is a global equity fund unavailable to UK based investors – so we had no incentive to select the fund as we can’t use it in our portfolios – but the system on which it is based, S-Ray, is truly ground breaking, and analyses companies’ compliance with the United Nations Global Compact: Human Rights, Labour Rights, the Environment, and Anti-Corruption (GC Score).
Overall, we felt Arabesque provide compelling evidence, through the excellent performance of their Systematique Fund, that taking ESG factors robustly into account can provide returns that are equal to or better than those possible from conventional benchmarks.
It was a pleasure to attend the awards, and to see firsthand the inspiring work of fund managers who share with us a passion for making a positive impact on the world and the societies that we live in.
