Last week was Good Money Week: seven days of raising awareness of sustainable, responsible and ethical finance. From banking to pensions, savings and investments the promoter’s aim is to help people make good money choices.
To mark the occasion, Amanda O’Toole, manager of AXA ACT Framlington Clean Economy fund, spoke to us about the threat of climate change and what we – and investors and individuals – can do to help create a cleaner economy.
“The Intergovernmental Panel on Climate Change (IPCC) Special Report on global warming, published in August, predicts that temperatures could reach 1.5°C above pre-industrial levels as soon as 2030 – which increases risks to health, livelihoods, food security, water supply, economic growth and more*,” said Amanda.
“The report marked a significant milestone as the first scientific study on climate change since 2013, solidifying the importance of addressing the climate transition. In the race to net zero, we have a responsibility as individuals to help protect our planet – and as investors, we have a clear role to play.
“Here are a few of the ways that we can be part of this important megatrend, both as a consumer and an investor.”
Nearly two thirds of household energy consumption in the European Union in 2019 went on heating homes.** That’s significant given that, according to one study, we spend on average 90% of our time indoors.*** From having a smart meter to monitor your energy usage, to choosing a provider that generates power using renewable resources, there are several steps you can take to heat your home in a more environmentally friendly way - and save money. “Energy providers which we believe are making great strides in the renewables space include NextEra and Iberdrola,” said Amanda.
Around a third of the food that is produced globally is lost or wasted each year.**** This is a huge problem globally, and one that requires efforts across government policy, corporates and consumer behaviour. “One example of a company making inroads into this issue is Christian Hansen, which provides solutions for extending the shelf life of dairy products,” explained Amanda.
Agriculture is also causing more damage to oceans than plastic – the cost of excess fertilizer run-off into the oceans is estimated at between $200bn and $800bn annually.***** “Precision agriculture companies like John Deere can enable more crops to be grown using less water and fewer chemicals – kinder to the environment and improving harvests such as the wheat used in your cereals,” Amanda added.
“Up to 50 million tonnes of electronic and electrical waste is created every year******, but companies like Waste Connections can help people to recycle their old computers, televisions and more,” Amanda continued.
“In addition, by 2030, a third of global car sales are expected to be electric vehicles (EVs).^ Choosing to purchase an EV instead of a petrol or diesel one is a way of helping combat climate change and this is a growing area of interest for investors, whether it is vehicle manufacturers like Tesla or EV components like Aptiv and battery producers like LG Chem.”
Companies operating leisure and entertainment facilities are increasingly looking at how they can make their premises more sustainable. “For example, thanks to Alfen, The Hague football stadium in the Netherlands can generate its own energy from solar panels, which is then stored during the day to light the stadium at night. The energy also powers EV chargers for the cars the spectators use to travel there^^,” said Amanda.
Sports fans who have something to eat and drink while they watch the match can also make positive changes that help the environment. Certain foods such as beef have a much higher carbon footprint than other plant-based alternatives.^^^ “US food company Beyond Meat commissioned a study that found its plant-based burger generated 90% less greenhouse gas emissions than a quarter pound of beef^^^^,” added Amanda
“And those French fries? Darling Ingredients is a US company that collects used cooking oil from restaurants and turns it into biofuel that can be used in the aviation sector.”
When it comes to soft drinks, choosing an aluminium can rather than a plastic bottle can be much better for the environment as they are 100% - and infinitely – recyclable.^^^^^ Some 320 billion drinks cans are sold globally each year^^^^^^ - and more than 100 million cans are recycled in the US every minute, according to Ball Corp^^^^^^^, one of the market leaders in sustainable packaging.
“As investors, we have identified many attractive potential investment opportunities in companies operating across the clean economy,” concluded Amanda. “Consumers are swiftly changing their consumption habits and are playing a more active role in reducing greenhouse gas emissions – from the provenance of ingredients and raw materials to the environmental impact of finished products and packaging. Meanwhile governments and corporates are increasingly committed to net zero targets, and are investing accordingly, seeking clean energy, storage and energy efficiency services. In addition to existing consumer trends and cost-effective technologies, we believe this represents an opportunity for investors in the clean economy.”
*IPCC special report, Global Warming of 1.5ºC
**Eurostat statistics explained, Energy Consumption in Households, June 2021
***EPA United States Environmental Protection Agency, Indoor Air Quality
****Food and Agriculture Organisation of the United States, Food Loss and Waste Database
*****BofAM, Climate Change January 2020
******UN Environment Programme, 24 January 2019, Time to seize the opportunity, tackle challenge of e-waste
^^Alfen, 18 December 2017, Energy storage makes The Hague football stadium self-sustainable
^^^Carbon Brief, Interactive, What is the climate impact of eating meat and dairy?
^^^^University of Michigan, CSS publication number CSS18-10
^^^^^Ball Corporation, Beverage Cans
^^^^^^BofAM Climate Change, January 2020
^^^^^^^Ball Corporation, 2015
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and do not constitute financial advice. Mention of specific securities is for illustration only and not a recommendation to buy or sell those securities.