Sustainable Investing  

Guide to building a sustainable global equity portfolio

  • Explain what 'greenwashing' is
  • Identify some investment implications of sustainability
  • Describe the impact of Covid-19 on climate science
CPD
Approx.60min
Guide to building a sustainable global equity portfolio

Introduction

Sustainable investing has moved from the fringes of investing conversations to being the centrepiece of how many fund houses present themselves.

Inflows from investors have risen alongside the increased focus on the sector, with UK clients placing an average of £124m net of new money every week into funds within the sector in the first nine months of 2019. 

But while flows have been strong, the total assets under management of the sustainable investment sector remains below 3 per cent of the total market in UK funds right now, and this has been largely unchanged over the past decade, as conventional equity markets have also performed well.

However, data from Square Mile Research indicates the Covid-19 crisis has sparked a significant increase in interest in sustainable funds, with four of the top five most-viewed funds on its platform being in the sustainable category.

James Glover, chief operating officer for fund research at Square Mile, says: “The first quarter of 2020 will be forever associated with the outbreak of Covid-19, with the global economy being effectively shut down in March, and seemingly all market-related news referencing the pandemic. 

“Against this backdrop, the performance of responsible funds has proven to be more robust than those without a responsible element within their mandate.

“When coupled with the significant uptick in interest in responsible investing in general over recent years, it is perhaps not surprising that funds within the Academy of Funds with ‘responsible’ ratings were the most viewed over the quarter.”  

In this guide to building a sustainable global equity portfolio, we look at how to avoid “greenwashing”; how to build a sustainable portfolio that is truly diversified; and how to access the emerging trends and technologies that will impact negatively on many of the companies in conventional equity portfolios, while driving returns for funds in the sustainable investment universe. 

This guide is worth an indicative 60 minutes of CPD.

David Thorpe is special projects editor at FTAdviser and Financial Adviser

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. According to the first article, what is 'greenwashing'?

  2. In the first article according to Louis Florentin-Lee, it is enough to offset the negative aspect of a business with charitable donations elsewhere, true or false?

  3. According to Michael Crawford in the second article, what is having a material impact on share price?

  4. According to Craig Bonthron in the third article, what purpose does the 'slough of despond' serve?

  5. According to the third feature, emerging markets hold no prospects for sustainable investing, true or false?

  6. According to the fourth feature, what is likely to be the impact of Covid-19 on the field of climate science?

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You should now know…

  • Explain what 'greenwashing' is
  • Identify some investment implications of sustainability
  • Describe the impact of Covid-19 on climate science

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