Sustainable investing doesn’t mean waving goodbye to profit.
Terry Billson
According to Morningstar, over the past three to five years sustainable funds track records have proven strong with 2018 being a bumper year. Sustainable funds outperformed benchmarks. 63% are in the top half of their categories and just 37% finish in the bottom half of their respective categories for the year. Broader stock market returns in 2018 were the worst since 2008 with bond market returns sitting at the lowest since 2013. So there’s no evidence out there that this is an underperforming way to invest.
There’s a disconnect between the aspirations of the world people want to live in and the behaviour of their capital in the financial markets and their expenditure. Imagine linking people and organisations with capital that ensures investments that reflect the goals and aspirations people have for their world.
Change
Awareness
Sustainable investing is fast becoming mainstream, and yet too many people are either unaware of it or don’t understand how to implement it in their portfolios.
Accessibility
The sustainable investing product set has come on a long way over the last few years. More needs to be done to make it easier to invest. FedGroup has an Impact Farming scheme, borne from the increasing pressure on the national grid, the supply of fossil fuels, and demand for alternative energy sources. Urban solar farming allows individuals to buy a panel installed on a shopping centre or industrial unit. In the way the landlord saves on energy costs investors receive a share of the profit. At the time of writing the price per solar panel was R5,000 and there were 2,000 available to purchase, with an advertised return of 10 – 12%.
Attitudes
There are still plenty of misconceptions when it comes to sustainable investing. Many people think that you have to sacrifice financial returns. In reality you can expect to get the same if not better returns through sustainable investing.
People confuse sustainable investing with philanthropy. They don’t understand how sophisticated the sector has become. Institutional-quality fund managers launch new strategies every year.
We have come a long way since the early 2000s when I entered the renewable energy sector, but sustainable investing is still on the periphery for investors. I believe if we can overcome these obstacles, we will have finally turned sustainable investing mainstream, This is the only wayne can establish the critical link between capital and the aspirations people have for the world.