By Annabel Brodie-Smith
Last Sunday we suffered our own Halloween nightmare when a howling storm caused an almost 24-hour power cut. No power, no water and most importantly no tea. But this unpleasant experience, which happened to coincide with the start of the UN Climate Change Conference (COP26) in Glasgow, has made me think long and hard about climate change and alternative energy possibilities.
I’m clearly not alone in this, as Boris Johnson commented on the eve of COP26: "Humanity has long since run down the clock on climate change. It's one minute to midnight and we need to act now.” And the government is putting its money where its mouth is, announcing this week it’s going to invest £25m in the launch of ThomasLloyd Energy Impact Trust, investing in renewable energy projects in Asia.
Investors are also highly concerned as our recent research reveals. Climate change is the most important ESG issue for private investors, with 56% finding it important when investing, followed by transparency and disclosure (51%), pollution (46%) and human rights (43%). Just under two-thirds of private investors (65%) consider ESG issues when investing, with a marked difference between those under 45 (77%) and those who are 45 or older (61%).
Just a reminder, ESG stands for environmental, social and governance issues. You can find out about it and how it relates to investment companies on our website. We’ve also encouraged our members to publish their ESG policies and strategies on their profile pages on the AIC website and over two-thirds have already done so.
We’ve also talked to investment companies including Alliance, Witan and Brunner about what they’re expecting from COP26, and where climate change is presenting the most attractive opportunities for investors. Zehrid Osmani, Manager of Martin Currie Global Portfolio Trust, describes the current environment as “a vibrant period for investors to find opportunities in innovative areas”. He believes the transition towards greener energy sources is leading to opportunities in “renewable energy, electric transportation, more efficient and greener buildings, or robotics and automation as a way to reduce energy intensity.”
Last week was Rishi Sunak’s Budget and our regular columnist, Ian Cowie, explains what it all means for investment company investors. Money going into the NHS and similar fiscal stimulus programmes overseas will boost demand for goods and services supplied by global healthcare companies.
This is good news for investment companies investing in healthcare and events in Glasgow are also likely to stimulate renewable energy investment companies. As Ian concludes: “Investment companies enable shareholders to remain cheerful and seek rewards in the form of income and growth while our money makes a difference for the better.”
And Faith Glasgow delves into "skin in the game" – whether your manager or director invests their own money in their fund or not. Board directors have to disclose their holdings in their investment companies but it’s not so easy to find out when it comes to managers. It’s a topical issue as most investors would feel reassured if their managers held a significant stake in their company but as Winterflood’s Simon Elliott explains, this doesn’t always work out well in reality. Still it’s a fascinating debate and it always makes me sit up when I see a manager with a significant stake in an investment company like Nick Train’s £1m holding in Finsbury Growth & Income.
Finally, there is a Mello Investment Trust and Funds webinar on Monday 8 November from 6pm featuring fund managers, entrepreneurs, company presentations and educational content for investors. Please do use the code 0811MelloGuest to register for a complimentary ticket here.
I’m hoping for a less eventful Bonfire Night (the lights need to stay on!) and I hope the rest of November goes well for you.
Annabel Brodie-Smith Communications Director, AIC
