No asset manager has yet found a compelling strategy that delivers both financial returns to clients and halts the decline in biodiversity loss
That’s all awesome. We want that. Capitalism has many answers to the problems, many of which it has created, and the pursuit of market solutions is vital. The same applies to regulatory standards and political advances. It all happens. But the capital markets don’t have all the answers, and while a sustainable pension, positive-impact Isa, and zero-fossil-fuel bank account are 100 percent worth the effort, there remain problems your money won’t solve.
You may have heard a lot about green finance, sustainable investing, ethical pensions and so on this year, not least in the pages of this paper. All of these are great opportunities for individuals to redirect the flow of capital invested in the global economy towards renewable energy and other carbon reduction solutions, waste management and other corporate activities that will keep the planet from frying any more than it has done up until now.
Biodiversity loss is one of them. No asset manager has yet found a compelling strategy that will both bring clients financial returns and halt the alarming decline in biodiversity loss around the world. If you’ve been watching starlings murmuring around you for the past week or so and thought they seemed smaller than usual, this is a good example on your doorstep. How can a company monetize star protection?
Markets innovate, but the truth is that some things go beyond them. The inability of market forces to find quick and scalable solutions to all of the world’s problems is one of the main reasons Yan Swiderski, a former investment manager, co-founded the Global Returns Project, the Climate Crisis Foundation’s sole initiative.
It allows individual investors to allocate a small percentage of their total assets to charitable organizations. A recent report by the Global Returns Project shows that donating £600 a year to climate charities is at least 100 times more effective than any other single action anyone could take to reduce carbon. The portfolio of non-profit organizations that the project invests in consists of Ashden, ClientEarth, Global Canopy, Rainforest Trust UK, Trillion Trees and Whale and Dolphin Conservation. Each has been included for their effectiveness in protecting the natural world.
Yan suggests investors allocate just 0.25 percent of their assets to these organizations through the project. The returns may not be financial, but as Greg Davies, head of behavioral finance at Oxford Risk Consulting, suggested in a Mind & Money podcast: For real, non-financial returns, for money that makes you truly happy, the best thing you can do there. You’ll feel richer even if you’re not.
Of course, there are caveats to this theory, and it assumes that you don’t have to live on poverty or go into debt to give and feel good about yourself. But if it’s manageable for you, if it’s something you can actually stretch to because you’re investing anyway.
Perhaps if sustainable investing hasn’t seemed fast enough or very authentic to you yet, then this could be another way to make your money more direct, direct and positive in places that the markets can’t touch. Like preserving the rainforest, filing lawsuits against polluting companies, or protecting dolphins.
There are also investments that look and feel more like charity, in community projects rather than publicly traded stocks. A homelessness investment company – Greater Change – is founded on Ethex. Islington City Council’s first municipal green bond, Islington Greener Futures, is funded by Abundance Investment. Places to invest your money that are always good are Triodos and Charity Bank.
But if you just want to donate, there are thousands of charities desperate for help this Christmas. From Nourish Food Banks to local churches to National Energy Action and Shelter.
There are many pieces to this puzzle, and ethical and sustainable investing is huge and very, very necessary. But with all the talk about green finance and ESG, let’s not forget how much of the volunteer work we all depend on needs to be supported. Christmas is an obvious time to focus on it, but if you like the idea of giving a percentage of your total wealth, no matter how small, to charities, the emotional return you get — although that’s clearly not the point — could be so high its higher.