We don’t have the powers to perfect our global political and economic systems to immediately bring about the changes our planet needs so while we wait for the gap between our current reality and the desirable future state to be filled, should we accept certain practices that while not perfect move us closer to the future sustainable state?
Rarely does a day pass without weather events somewhere on the globe making headlines. Our inability to live sustainably is contributing to rising global temperatures, triggering unusual or unpredictable weather events to occur more frequently.
In recent weeks, Spain has experienced a blistering heatwave that saw temperatures 10-15C warmer than what would be expected for April. The magnitude and duration of this heatwave was described as unprecedented and extreme. Here in the UK, flooding is becoming an almost normalised event in many regions.
As the world strives to achieve net zero carbon emissions and limit global warming above the pre-industrial average to 1.5 degrees or less, we as fund managers are ever more mindful of the role that we can play in helping to achieve that goal. Our aim with the CT Sustainable Universal MAP range is to deploy capital in a way that improves the world we live in while also making good investment returns for our clients.
Avoid, Invest, Improve
Our overall approach to sustainable investment within the CT Sustainable Universal MAP range is built upon 3 key pillars: Avoid, Invest, Improve.
Avoid – We want to Avoid companies with socially damaging products or unsustainable business practices
Invest – We aim to Invest around themes and in companies which are either part of a sustainable future or will assist us on our pathway to it
Improve – We will seek to improve the companies we do own, engaging with management to drive change and share best practice. This is led by our Responsible Investment (RI) team
We also like to report on sustainability outcomes, and the 2022 Impact Report for the CT Sustainable Universal MAP range will be released shortly.
The Path to Sustainability: Restricting demand v improving supply
There is much debate as to the best approach for tackling the challenges we face in moving to a more sustainable world. One option, at the extreme end of the spectrum, is the potential curtailment of anything we consume in our day-to-day lives that is detrimental to stated global climate goals – end all air travel, move to a meat free diet and put in place an immediate ban on the use of fossil fuels, for instance. However, this degree of restriction on demand, or ‘eco-extremism’, is at odds with both our capitalist model that has helped to drive growth in innovation and prosperity and with our democratic society that preserves individual freedoms.
A better approach, in our opinion, would be to improve the existing capitalist model and supply the products and services that our society uses in a more sustainable way, treating workers better and including the cost of pollution, for example. This kind of ‘sustainable capitalism’ allows us to continue to live in the way that we currently do whilst being consistent with a sustainable world.
Supporting the Transition via Sustainable Investment
We like to think about the concept of a sustainable journey in terms of past, transition and future activities. Some practices from the past are clearly negative and we should move away from these as soon as possible – such as the construction of new coal-fired power stations or poor treatment of workers. Some current technologies are clearly aligned with a sustainable future already, such as renewable energy. But the gap between the current position and the ideal future state is large, and realistically the transition will only be possible through accepting some practices now that may not be desirable in the future sustainable state. Examples include nuclear energy, carbon capture and storage on existing gas plants and the mining of copper (if conducted well).
We use the framework of the UN Sustainable Development Goals (SDGs), which cover much of what is needed to take the world to a more sustainable place, as a starting point for investment. The SDGs comprise 17 goals with multiple targets beneath them which we subsequently align with key investment themes.
In this series of articles, we intend to dive into some of these thematic ideas in more detail.
We don’t have the power to perfect our global political and economic systems to immediately bring about the changes our planet needs. However, by acting as responsible stewards of capital we aim to achieve positive outcomes for our investors, the planet and those that inhabit it.