National Ethical Investment Week (NEIW) is underway, and we’re publishing daily interviews, conducted by Greenhouse PR, with a different ethical investment pioneer each day until Friday.
The next interviewee is Claudia Quiroz, investment director at Quilter Cheviot and pioneer of the firm’s Climate Assets Fund.
Tell us, in 20 words or fewer, about the Climate Assets Fund. What’s your mission?
To invest in companies delivering a cleaner and more efficient economy – arising from the convergence of climate change, demographics and resource scarcity.
What motivates you to do what you do?
I enjoy the opportunity to invest in sustainable growth. Growth is the key reason for investors’ interest in sustainability and environmental themes.
Most end-markets in this space are expected to see compelling growth over the next three to five years. This generates attractive investment opportunities when one understands the changes taking place with regard to consumer preferences, government spending, energy supply and security, food supply/demand imbalance and the general need for a cleaner and more efficient economy – the new economy.
For example, companies meeting demand for energy efficiency are set to benefit the most going forward. Energy efficiency is one of my favorite investment themes as it is not only the cheapest but also the quickest way of cutting carbon emissions.
We are talking about companies involved in transport infrastructure, building insulation and efficient lighting, industrial productivity gains, smart grid and energy storage, just to mention a few.
What are the biggest challenges in building momentum for ethical finance?
The recognition that sustainable investing, as well as ethical investing, means different things to different people. Unfortunately a ‘one size fits all’ strategy does not work.
What trends or developments are you most excited about in sustainable and ethical investment?
The industry has moved away from the focus on negative screening. We have increasingly stopped talking about what not to invest in and started to talk about ‘what to invest in’. As such, investment conversations are far more interesting and portfolios generate much better and consistent returns.
What one thing could change the future of finance?
The understanding that there are huge investment opportunities around solving the challenges to deliver more energy, food and water, for example, with a limited pool of resources and within a carbon constrained economy.
For instance, we have identified a universe of around 1, 000 companies around the world providing the products, technologies and services to deliver ‘the new economy’- cleaner and more efficient.
Where do you want to take the Climate Assets Fund next?
We are very proud of the Climate Assets Fund. I joined Cheviot four years ago particularly to develop this investment strategy.
Today, we have a dedicated team with over three years’ performance track record and an established investment process. I am looking forward to capitalising on our new sales and marketing team, as Quilter and Cheviot came together only early this year and now we are in the process of teaching our sales force about how we, at Quilter Cheviot, do sustainable investing.
What can we, as individuals, do to make a difference?
Put our money where our mouth is!
We have seen consumers increasingly buying organic food and wooden furniture from sustainable sources, insulating their homes, travelling by bike and train or even offsetting carbon emissions when flying. There is an increasing awareness of the economic impact of environmental issues. However we have not seen the same levels of demand for sustainable investment.
If you were prime minister for a day, what would be the first thing you’d do?
Ensure a high level of education for all, particularly on environmental issues.
I came from quite a poor background. However I was lucky enough to be given the opportunity to study and go to university. Education changed the way I look at the world and the changes taking place with regard to climate and investments.
What’s the coolest project or product you’ve come across, and inspired you?
The ‘Shinkansen’– the Japanese bullet train – is a very inspiring piece of engineering. I am a very pragmatic investor and I like technological advances that make real improvements to people’s lives.
The high-speed train reduces commuting travel time between key urban cities supporting social mobility and shifting passengers from the road to the rail – a more environmentally friendly and cost efficient way of transport.
Can you recommend a life or game changing book for our readers?
Socially Responsible Investing: Making a Difference and Making Money by Amy Domini – all about why the way we invest matters and how to make profitable investments without sacrificing your values.
What’s the best advice you’ve ever been given?
Very early in my investment career someone said to me, “Your job is most certainly to invest in good companies, but remember, not all good companies make you money”.
I think that the key is to time investment well, buying shares of high quality companies before their positive attributers are fully reflected in the share price.
If you could encourage people to invest in one thing, what would it be and why?
I would like retail investors to realise that to smooth returns and reduce volatility during the economic cycle, one needs to invest in multi-asset classes. We have seen long equity funds have high volatility in the downturn. I would encourage financial advisers to discuss these particular issues with their clients.
Can you leave us with who’d be your ethical investment pioneer?
Amy Domini is my ethical investment pioneer. She is a true pioneer in the field of responsible investing. She launched the Domini 400 Social Index, now part of the FTSE Indexes range back in 1990. She had the idea of promoting an index constructed by using environmental, social and governance (ESG) issues as a benchmark.
She is a still a very active investor involved in many boards in the US and advising on how the way we invest matters to the planet and all of us. Since launch to the end of September 2013, her social index returned 849% compared with the Standard & Poor’s (S&P 500) increasing 733%. This is without doubt a very impressive long-term investment performance!
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