“If you want to change things it will be hard but you can call the asset managers or asset owners to influence them to ask the right questions,” he explains.
What’s in the portfolio?
Mr Gindre adds investors might be surprised at the stocks which could be investible on an ESG basis. In addition to thematic funds operating in obviously ‘sustainable’ areas such as renewable energy, a variety of major blue chip stocks could fit into a more mainstream ESG-filtered fund.
He says both Royal Dutch Shell and BP – stocks which may be discounted by strict ‘ethical’ investment mandates – have greatly increased their shareholder engagement after pressure from investors.
He says both oil giants have published documents on what they each plan to do about finding sustainable sources of energy for customers, which means both firms are “going in the right direction” meaning it “could be a good time to invest”.
Mr Gindre also says while the debate about sustainable investment usually focuses on equities, companies issuing bonds also hold roadshows – a good time for ESG questions to be posed.
“When companies are raising new debt they have roadshows and as an investor you can ask questions related to ESG,” he says.
“The investor has the power here and if you don’t think they have the right answer then don’t invest.”
Haydon Waldek, director at Gaeia – Global and Ethical Investment Advice – advises clients who have specific desires for their investments in terms of them being sustainable and ethical.
Recently, the company, via its investment affiliate Castlefield, made an investment for its discretionary clients in retailer Debenhams based on an assessment of its sustainable and ethical credentials.
Mr Waldek said Debenhams had a sustainability microsite which was out of date so a call with the retailer was organised and the company said the site would be addressed.
Mr Waldek said Castlefield then spoke to Debenhams’ director of ethical trade and corporate responsibility and came away from the call “confident Debenhams is well aware of the key issues facing the sector and has appropriate policies in place to tackle them”.
These ranged from participation in the Sustainable Clothing Action Plan, which aims to cut carbon emissions, water use and waste to landfill, to their internal audit requirements for their supply chain, “which entails strategic approval being required by the sourcing team before a factory can be approved”.
This shows the importance of communication in understanding the sustainable or ethical elements of investments.
Alliance Trust Investments has made moves to boost its presence in the sustainable space too. The company publishes its sustainability criteria on its site and all the companies held in its Sustainable Future funds are disclosed on the factsheets.
