Pull any typical investor and their financial adviser off the street and ask them what they think about sustainable, responsible and ethical investment and the investor will look confused. The adviser will typically roll their eyes. Those three adjectives will paint for both an image of new age hippies, terrible knitted sweaters, poor personal hygiene and Birkenstock sandals.
Especially in Britain, where the whiff of something slightly new or remotely different fills many with utter dread. Even many of the most enlightened investors will say: “Sure, of course we need to be ‘ethical’ about stuff, but I still need to have a good return on my investment.”
The arguments against sustainable investment are legion and the majority bad. Very few stand up to close scrutiny as this handy pdf from the good folk at Good Money Week illustrates. I’ll simply summarise the myths here:
– Sustainable investment means choosing specific accounts/funds which screen out unethical choices = WRONG
- Marga Hoek Appointed To BMO’s Responsible Investment Advisory Council
- Scheme For Ethical Investment Pushed By USS
- Vigeo Eiris 2016 UK & Europe Retail Fund Estimates Show Strong Responsible Investment
- Ethical Investment Opportunities Being Missed By Consumers
- Good Money Week 2016 – 5 Reasons Why Ethical Investment Makes Sense
– Sustainable investment means sacrificing financial performance for ethical value = EPICALLY WRONG
– Sustainable investors are mainly teachers and social workers = WRONG AND INSULTING
Point of order: it’s as if the views of people who educate children and help those in most need (with low salaries but important jobs) have less merit than others (with better salaries but unimportant jobs)
Point of order: the Global Sustainable Investment Alliance reports that global sustainable investment assets had continued to grow to $21.4 trillion at the start of 2014
Point of order: the Global Divest Invest Coalition of pension funds, health, education, philanthropy, faith, entertainment, climate justice and municipal organisations commit to divest from fossil fuels and invest in renewable energy and climate solutions, growing 50-fold in just one year and topping $2.6 trillion
Some pretty well-paid teachers and social workers to have $24 trillion to invest
– It has to be all or nothing as far as my money’s concerned = WRONG AND JUST A LITTLE BIT SOCIOPATHIC
– Investing sustainably is just too complicated = WRONG AND LAZY (t’internet has all the world’s knowledge, I used to have to go to a library and look at microfiche)
– It’s impossible to influence big banks = WRONG
– I don’t have much money to invest so it won’t make a difference = YEP, THAT’S A BIG ISSUE, BUT THERE ARE ALWAYS OPTIONS. EVERY £1 MAKES A DIFFERENCE. SERIOUSLY.
But here’s my humble take.
The theme that runs through most of the argument is that they’re depressingly lazy because they are only ever applied to sustainable investment. The argument is against sustainable investment because the mainstream is somehow… ‘better’.
Status quo bias is difficult to deal with when you’re trying to do something new or different. While it’s quite easy to rebut the lazy arguments of the unsustainable, irresponsible and unethical mainstream, very few of us get the platform we need to actually have the discussion. The media is funded, in large part, by unsustainable, irresponsible and unethical financial services. In the meantime, the mainstream has given us:
– Boom and bust from before 1494 and ever since
– The global economic crash of 2007 to date, which no mainstream economist or bank, or bank-economist predicted (The same people are about to give us the the next Big One in 2018, give or take)
– VW emissions scandal, Tesco horsemeat scandal, BP Deepwater Horizon, etc.
– Asthma, 29,000 premature deaths in the UK and foetal abnormalities from air pollutants
– Rising inequality, falling social mobility, low pay, outsourcing and the downsizing of your job
If the status quo – ‘what is’ – was ever subject to the same analysis of the new or different, it would fall at the first hurdle. So let’s run just two of those myths in reverse. Are you happy with an investment philosophy that says:
– Unsustainable investment means investing in things regardless of their social and environmental impact
– Unsustainable investment means sacrificing our society and the environment
When the alternative options – clean energy, energy efficiency, community energy, fair trade, sustainable agriculture, forestry and fishing, etc. – are the disruptive, innovative and fast-growth sectors which will create more jobs and greater prosperity in the future.
Good Money Week is about creating a platform for the discussion of something new and different in investment. Investment that balances economic needs, with society’s needs and the needs of our fragile environment.
We hope you’ll enjoy it as much as we will.