A sustainable investor explains how to secure financial freedom and save the planet
The world of investing is changing and the under-30s are taking their piece of the pie. Can investing in ethical businesses offer good returns?
By Ann Storr
Say “Investment portfolio” and what comes to mind? Chalk striped suits, old boys’ networks and ‘Succession’? You’re not the only one. With memories of 2008’s devastating crash still resonating, investing can feel like the province of the elite and wealthy, a dirty word and part of the old-world order.
Not so for the under 30s. A combination of challenges including an unobtainable housing market, COVID-19 and the climate crisis continues to challenge financial stability. To build a stronger future, young people are bucking the old notions of what it means to be an investor by buying into sustainable investment funds that both protect the planet and their financial futures.
A positive impact on the world
This trend reflects Gen Z’s rejection of fast fashion, factory-farmed meat and eschewing air travel.
Nick Agwuncha, 28, co-founder of the Money Medics, agrees that investing in environmental, social and governance (ESG) funds in the under 30s is rising because “people are becoming more conscious of the climate, sustainable fashion and how they can do good in society… if you ask the person on the street, they probably don’t understand what ESG is, but people want to have a positive impact on the world – they want to be altruistic”.
There appears to have been a sudden shift towards this sustainable investing trend. Research found that 69% of people now considering ESG investing have only done so in the last year 1. But, what’s the meaning of ESG?
- Environmental: companies who work in reducing energy consumption, reducing pollution, natural resource preservation and combating climate change
- Social: companies who actively support human rights and combat child and forced labour, engage with local communities, keep health and safety paramount, and prioritise both employee and stakeholder relations
- Governance: companies who have excellent management, an independent board, few conflicts of interest, reasonable and proportionate executive compensation, are transparent and have good shareholder rights
So, what makes someone choose to invest their money ethically?
A personal choice
Mayowa Ogunremi, 24, is a British graduate, working and living in London. Mayowa started investing in ESG when she was 22, a fresh graduate looking to secure her financial future.
With the UK housing market looking so out of reach for her generation and wanting to make every pay-check work for her retirement, Mayowa knew that any financial decision had to be aligned with socially responsible investing: “When I left uni at 22 I realised that I had a long life of work ahead of me, and I wanted my money to start working for me. After my first paycheck, I started looking around for the best ways to invest my money.
“I was trying to not buy things from Amazon due to its poor human rights record, so the idea of investing in them whilst minimising my consumer exposure felt redundant.
“I did about two months’ research looking at socially responsible investing, sustainability rankings, and individual company holdings and created my assessment of which companies I would negatively and positively screen into my portfolio.
"The only financially responsible decision"
“I’ve experienced positive returns since starting to invest in February 2019. There’s a perception that investing in ESG yields lower returns but in my experience, they have been comparable. I’m a long-term investor who’s not looking to take my money out for 10 or 20 years.
“In the long run, the science is clear: fossil fuels present serious risks to investors because these companies aren’t transitioning quickly to avoid stranded assets [assets that become less valuable due to economic or regulatory changes associated with the energy transition, such as coal mines]. So, long-term, minimising exposure to these companies through effective ESG investing feels like the only financially responsible decision.”
And that’s the financial truth: investing in ESG means you’re investing in funds that are looking towards the future, assessing its risks and challenges with open eyes and challenging the ‘business as usual’ norm. Remember, whatever type of investment you have, its value can go down as well as up and you could get back less than invested.
Everyone has a different reason to invest their money ethically. We spoke to four people who explain why they checked where their money was being invested.
Our Climate Transition Equity Funds
Our Climate Transition European Equity Fund and Climate Transition Global Equity Fund make it easy to start changing the world from your sofa. The funds focus on inclusion, rather than exclusion, helping companies who are building a more sustainable future and are more than funds that simply exclude 'bad' themes such as tobacco and oil.
The funds' objectives include long-term growth, positive climate risk management and monitoring and reporting climate outcome.
We all know we can’t solve the climate crisis overnight, but small sustainable changes all add up: take your canvas bags every time you shop. Don’t eat meat every day. Only boil as much water as you need for a cup of tea (and don’t forget to drink it).
By moving your investments to an ESG fund, you’re investing your capital with organisations who are looking to the future health of your investment and a world that could provide you with a comfortable, peaceful and prosperous future.