In this edition...
- The final frontier of research and due diligence conquered Eric Armstrong, Client Director
- Hours to minutes Eric Armstrong, Client Director
- World Economic and Market Outlook Graham O’Neill, Senior Investment Consultant, RSM.
- Inflation – what to make of the current dynamics Maria Municchi, Fund Manager, Sustainable Multi Asset Fund Range M&G Investments
- Sustainable Investing – advice from an old hand Hugo Thompson, Multi-Asset Investment Specialist HSBC Asset Management
- The biggest changes in ESG investing over the last 10 years Mark Coles, Head of Nationals & Networks Tilney Smith & Williamson
- Don’t try and defy gravity Catriona McInally, Business Development Manager – Investments Prudential
- Sustainable investing – the defining decades Hamish Chamberlayne, Head of Global Sustainable Equities | Portfolio Manager Janus Henderson
- Finding diversification beyond commercial property Shayan Ratnasingam, Investment Manager Liontrust Multi-Asset team
- Looking to alternatives in an uncertain world Chris Forgan, Portfolio Manager Fidelity Multi Asset
- Developing your investment proposition (CIP or CRP) David A Norman (DAN), CEO, TCF Investment
- Intergenerational Financial Planning Gareth Davies, Pension Specialist, Scottish Widows
- Is your online client reporting up to scratch? Natalie Holt, Content Editor, The Lang Cat
- Partnering here to stay as multi-asset solutions grow Antony Champion, Head of Intermediaries, Brewin Dolphin
- How to Capitalise on the Economic Recovery, Including Morningstar’s Portfolio Positioning Leslie Alba, Associate Director, Research Morningstar Investment Management Europe
- Unemployment insurance is back Kesh Thukaram, Co-Founder Best Insurance
A lot can happen in 30 years. Over the past three decades, we have seen explosive progress in science, technology and communications. In the same timeframe, the need for sustainable practices has become paramount. On the 30th anniversary since the origins of our Global Sustainable Equity team, we take a look at the developments that have shaped sustainable investing and the world we live in today.
"Seven decades since its creation, reaching 381 million tonnes in 2015.1 Meanwhile, atmospheric CO2, which contributes to the warming of the planet, has continued to climb."
The 1987 paper Our Common Future, otherwise known as the Brundtland Report, provides the origins of sustainable investing. This defined 'sustainability' as "development that meets the needs for the present without compromising the ability for future generations to meet their own needs". It was upon these principles that the Global Sustainable Equity team began investing four years later.
Here, we look back at the drivers of development.
Science – transforming the outlook for life expectancy
As the standard of living improved across much of the world, so did global life expectancy. By 2011, the population reached seven billion – a billion increase on 12 years prior – and the human impact on the environment had become stark. Resource use, waste production and environmental damage have been accelerated by population growth and worsened by consumer habits in a linear economic (take-make-dispose) model. Plastic production has rocketed in the seven decades since its creation, reaching 381 million tonnes in 2015.1 Meanwhile, atmospheric CO2, which contributes to the warming of the planet, has continued to climb.
The pace and intensity of human's impact on the planet are clear. As the global population has grown, so too has consumption of the Earth's finite natural resources. This poses the key question that the world is currently grappling with – are we prepared to accept the potentially uncomfortable trade off and cost of moving from an unsustainable linear economic model to a circular economy based around renewable, electric and digital drivers?
Innovation – potential solutions
The technological architecture of today's world is built around the Internet. Data can be stored, managed and accessed without having to own physical infrastructure such as data servers. This technology, known as 'cloud computing', enables efficient, on-demand and multi-platform remote access to a broad network. This technology can help drive sustainability initiatives. A study by Accenture highlighted that if all businesses migrate to the cloud, we could see a 59 million tonne reduction in CO2 emissions, the equivalent of taking 22 million cars off the road.2
The past 30 years has seen great strides in clean technology innovation too, with solar, wind, hydropower, geothermal and tidal energy making up the largest types of renewable energy. Between 1990 and 2018, total worldwide renewable energy supply grew at an average annual rate of 2%, compared to the 1.8% in total energy.3
Batteries are another important component of sustainability and is an area that has seen a huge inflection in innovation over the past decade. To achieve higher penetration of renewable energy, it must be possible to capture, store and use energy when needed. Advances in battery technology have therefore been key to the movement away from fossil fuel dependence.
Lithium-ion batteries, rechargeable batteries found in portable electronics such as mobile phones and laptops, as well as hybrid and battery electric vehicles (EVs), have been game changers. Today's EVs benefit from the long-range capability and lightweight design afforded by lithium-ion batteries. The past decade has seen lithium-ion battery production surge, leading to an 85% decline in price which has made EVs commercially viable. Last year alone, global EV sales grew by 41%.4, 5
The path to a circular economy
As set out 34 years ago in the Brundtland Report, sustainable development is development which meets the needs of the present without compromising the ability for future generations to meet their own needs. Over the past three decades there has been huge progress in sustainability, yet significant challenges remain and, as things stand, we remain on a destructive path with an economic model that is still linear and fossil fuel driven.
As science and technology have improved, so has our understanding of what is needed to make the planet sustainable. We believe the next step in the planet's sustainability journey is to decouple growth from the consumption of finite resources by operating through a circular economic model. In this model, the future will be shaped by renewable, electric and digital forces. By continuing to evolve and commit to the technologies already in place we believe it is possible, and essential, to switch to the circular economic model.
- Our World in Data, Plastic Pollution, September 2018
- Accenture, The green behind the cloud, September 2020
- International Energy Agency, Renewables Information, August 2021
- CNBC, The battery decade: How energy storage could revolutionize industries in the next 10 years, December 2019
- International Energy Agency, Global electric car sales set for further strong growth after 40% rise in 2020, April 2021
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