Do good for the planet

How to invest and do good for the planet

In March, energy company Royal Dutch Shell announced it was going to halve its carbon footprint by 2050 – the first time in its history Shell has issued carbon footprint targets.

The result of heavy-lobbying from environmental activists, you might think.

Not quite. Though eco-warriors have targeted the company for their environmental behavior for years, what actually contributed to change was a different green concern: money. Since the 2015 Paris climate agreement, Shell had come under increasing pressure from its shareholders to tackle carbon emissions. Shell announced its new targets will be linked to the remuneration of around 150 executives in 2019 and will be expanded to 16,000 employees next year.

How do investors wield such influence?

More and more investors in New Zealand and around the world are integrating environmental, social, and governance (ESG) considerations into their security selection criteria and actively engaging with companies to improve their ESG practices.

More and more research is indicating that companies who take more responsibility from an (ESG) perceptive may be more profitable and attract more capital than those companies that don’t.

Companies with better sustainability practices are likely to benefit from the growing global pool of investment funds that invest with a sustainability and positive investing focus. In contrast, companies with poor sustainability practices may see capital withheld and their share prices languish.

There is a growing body of research that indicates there is no negative investment return impact from emphasising investing in companies implementing sustainable practices. There is also no obvious sacrifice to portfolio diversification or long-term performance.

So, by making the choice to invest into Ethical or Responsible investment funds you can do good for the planet without compromising long term investment returns.