Jupiter’s investment teams have looked at ESG (environmental, social and governance) issues within their investment process for a long time. Part of my agenda is to make sure that we inform our clients and our wider stakeholders better about how we think about ESG issues.
I believe that ESG is an analytical framework not a fund or security. It is a way of looking at the world that takes account of environmental, social and governance issues and tries to price them. We are thinking about them as investment risk and opportunity.
Another part of my agenda concerns Jupiter as a company. As a responsible business and a sustainability leader, we must continue to behave in the way that our stakeholders expect a responsible business to act. It is absolutely thinking about the triple bottom line: people, planet, profit.
There is a recognition in the industry that if we do not think about the consequences of what we are doing on the wellbeing of the planet and people then we are heading for mass extinction. We know the next decade is critical in terms of shifting the system to allow us to remain within safe boundaries of global warming.
The Global Financial Crisis brought a wave of new banking and capital regulations, and with the climate crisis, we have seen a great many regulatory and policy interventions There will be more because regulation only goes one way.
What will the industry look like in 10 years? Perhaps $2 or more of every $3 will be invested sustainably. The direction of travel is clear. In 2005, investing in onshore wind was pretty esoteric even though the technology was old — a wind turbine is a windmill. Onshore wind is now a mature technology, and it is cost competitive with fossil-fuel generation.
We see innovation in companies developing vertical farming and lab-based meat. We must feed the planet but do not have to use intensive agricultural practises. Investing in our oceans is important. For example, a company is building artificial reefs in Mexico to reverse coastal erosion and rehabilitate fish stocks, and also to protect the local economy and jobs in the tourism industry.
I do not see tension between planet, profit and people. I see natural alignment. If our clients, for whom we are investing, can’t enjoy the benefits of their retirement because of climate change or ecosystem degradation, we will have failed as investment professionals. We are working extremely hard to ensure that does not happen.
The value of active minds: independent thinking
A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.
This communication is intended for investment professionals* and is not for the use or benefit of other persons, including retail investors.
This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested.
The views expressed are those of the author at the time of writing and are not necessarily those of Jupiter as a whole and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Holding examples are for illustrative purposes onl