INSIGHTS

This year’s Earth Day theme ‘invest in the planet’ is especially relevant when it comes to the rise of Environmental, Social and Governance (ESG) themed investing around the globe. With that in mind, what are the key sustainability trends this year and what are governments and corporates doing to invest in the planet?

Sustainable investing continues to grow in importance.

With momentum behind sustainability investing growing in 2021, investors, companies, and governments around the world have higher expectations for progress on climate action this year.

As well as increasing environmental concerns, social issues such as diversity and inclusion, and employee wellbeing are expected to remain in the limelight. These issues are becoming increasingly important within broader sustainability discussions.

What are governments doing?

At the UN climate change conference last year, known as ‘COP-26’, world leaders gathered to discuss the pressing issue of climate change, and agreed to start collectively investing in the planet. Some of the highlights from the conference are included in the chart below.

Invest in businesses that are investing in the planet.

With all the government commitments made at the COP-26 conference, net zero emission commitments are fast becoming an expectation for many businesses.

Companies that are ahead of the curve will be best-positioned to spot opportunities and deal with increasing regulation as governments try to meet these net zero commitments ahead of the 2050 deadline.

The most impactful way that businesses can invest in the planet is by setting targets to keep global warming at 1.5 degrees Celsius. This equates to a 50 per cent reduction by 2030 and a 100 per cent drop by 2050.

Local companies aligned with this are Spark, which is aiming for an emissions reduction of 25 per cent from 2016 levels by 2025, and Meridian Energy, which hopes to halve operational greenhouse gas emissions by 2030.

Further afield, ASX-listed Transurban is targeting a 50 per cent reduction in emissions by 2030. In the US, Apple has an aspirational goal to be carbon-neutral across its entire supply chain and product suite by 2030.

What can you do as an individual investor to invest in the planet?

By giving sustainability consideration when building your investment portfolio, you can ensure you are invested in companies that are taking appropriate steps to mitigate climate change.

We have developed our own sustainability scores that we use to assist our clients in constructing portfolios to suit their individual values.

If you are a Craigs client and would like to know more, please get in touch with your adviser. We have a wealth of excellent material and resources for clients to consider, including in-house sustainability reports on individual listed companies from New Zealand and the rest of the world.