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Earth Day is a global annual event on April 22 to demonstrate support for environmental protection.

First held on April 22, 1970, it now includes a wide range of events coordinated globally by EarthDay.com

This Earth Day we’ve been deluged with various announcements from different world leaders about their new environmental targets, one can’t but wonder if Greta’s “loopholes and bull****” twitter video is accurate tea-leaf reading;

However, putting our cynicism to one side, it is clear that climate change represents a clear and present danger to people and our way of life.

What is the right thing to do?

Is a really difficult question, protagonists in the climate change debate tend to focus ‘easy’ targets, but perhaps lack honesty in their arguments.  Indeed, there is a serious disconnect between the stuff you often see depicted on screens and in newspapers to symbolise the environmental movement, and what stories the scientific data actually tells us about the realities of carbon emissions. 

Did you know, for instance, that we create far, far more greenhouse gas emissions through the manufacture of cement than the entire total emissions from the aviation industry? It accounts for anywhere between 6 and 8% of global emissions – that’s more than the entire combined emissions of every plane in the sky, every train on a track and every ship in the ocean. 

Or consider another example. Consider the billions of homes around the world where we all live: they are responsible for about 10.9% of total global carbon emissions. However, the combined emissions of the iron/steel industry and chemical sector are similar or greater, depending on what you’re including (10.8% if you only consider the energy powering these plants, a whopping 13% if you include the emissions puffed into the sky from chemical plants). On the one hand, nearly eight billion people; on the other, a few thousand plants.

What is Investment & Retirement Solutions Ltd doing about it?

Like many of our clients, we’re a little conflicted: we want to protect the planet for our future generations, but we also want to maintain our lifestyle, we however are also acutely aware of the threats (and opportunities) the investment world faces from climate risk.

We supported Black Out Tuesday, but in reality how much difference was made?  We’re very open about the attempts we make, running our business to be as sustainable as possible, check out our public statement here, but a more fundamental change in societal attitudes is what we suspect is really needed.

Our Ransom Hall office, in Sherwood Forest, has its own three-acre Solar Farm – making our office and those of our neighbours, entirely electrically self-sustained with green power. From the office window a variety of wildlife including fallow deer can be seen (unless they see you first!) 

Back in February 2020, we reported on government research which found that:

  • The majority of UK consumers want their pensions, investments and savings to make a profit, BUT also to have a positive impact.
  • 70% want positive environmental returns
  • 75% want societal benefits from their pensions and investments.
 
Following some UK government commitments, our November 2020 article explored Green Finance
 
In that article we quote Kwasi Kwarteng:

“Transforming our financial system for a greener future is crucial as we build back better from Covid-19 and to meet our legally binding target for net zero carbon commissions by 2050”

and then Business Secretary Alok Sharma, who had called for the coronavirus pandemic to be used as the catalyst to reshape the global economy to achieve sustainability goals. Sharma stated: 

“By investing now, to reduce our emissions, build resilience, and adapt to climate change, we can create jobs and generate growth; And at the same time, we can protect the planet for future generations.”

So what about ESG investing?

Increasingly clients are specifying investment strategies that are sustainable, ethical and socially responsible, indeed such investment solutions are now included within the mainstream. However, we are concerned about “green-washing” – the process of trading out of perfectly suitable investments and then reinvesting into something else with a green ‘veneer’. We don’t feel such exercises are necessarily useful. Indeed on 23 February this year, our Paul C attended a (virtual) meeting with Guy Opperman MP, Minister of Pensions to explore how investment funds can subtly shift their focus into more sustainable assets, a strategy which requires no action from retail investors and gradually helps to rebalance towards sustainability.

How does sustainability impact my investments and pensions?

The Bank of England has examined the interconnected links between the economy and the environment, but more worryingly, the impact which environment has on the economy:

The economy and the environment are closely linked. Many economic activities have an impact on the environment. Burning coal, oil and gas can contribute to climate change, while waste from factories can pollute our land, rivers and sea.

The environment can affect the global economy too. For example, the floods in Thailand in 2011 resulted in over $45 billion of economic losses. More positively, at the other side of the globe, the mangrove forests in Mexico provide storm protection and give support for fisheries and eco-tourism. These benefits have been estimated at $70 billion in financial terms.

Climate change is, therefore, a central issue to consider and is widely seen as one of the biggest threats to a sustainable future. The steady rise in human activity – and the subsequent greenhouse gas emissions – witnessed since the industrial revolution has already had a considerable and measurable impact on our planet.

Please don’t hesitate to get in touch if you’d like to talk about how sustainability and your investments and pensions may be working together.

As ever, all investments carry risk so please pay attention to the regulatory risk warnings below:

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Notices:

Our posts are intended as financial education and financial information, not as financial advice, and are only suitable for UK residents. Always take professional, independent advice before acting on any information.

Investment & Retirement Solutions Ltd is authorised & regulated by the Financial Conduct Authority.

The value of investments and income from them can fluctuate (this may partially be the result of exchange rate fluctuations) and investors may get back less than the amount invested. Past performance is not a guide to future performance.

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