The consequences of the COVID-19 pandemic will clearly be profound. So, it’s no surprise that we’d seize on any sources of optimism to be found as the crisis unfolds. One positive impact is the immediate effects on the environment.
Greenhouse gas emissions have fallen. As countries around the world have taken steps to restrict activity and travel, data from NASA suggests that air quality has improved dramatically.
This could be an opportunity for organisations to rethink how they do business. For example, do they need to return to a form or normality where they fly employees to meetings that could otherwise be held using video conferencing?
A Realistic Rate Of Change
Unfortunately, these environmental positives are likely to be temporary. The environmental gains from the pandemic have clearly been made alongside painful social, economic and health consequences. In other words, the current rate of improvement is unsustainable. Additionally, there is now a risk of governments prioritizing environmentalism less as they focus on dealing with the economic implications of the crisis. However, the investment industry can maintain this momentum.
If we’re taking environmentalism seriously, we would rather see a smooth transition at a rate less dramatic than we’re seeing at the moment. We don’t want to be in a position of having to bring a halt to everything in order to have that environmental impact.
Investing For Change
So, how can we as advisers and our clients bring about this change? Through responsible investing. The Cambridge Institute for Sustainability Leadership defines Responsible Investing as ‘investment that creates long-term social, environmental and economic (sustainable) value’. Time in the market rather than timing the market is an expression I use when speaking to my clients about the future, therefore for them, responsible investing is the choice of long-term value that also recognises sustainable value – which is a rewarding decision.
Responsible investing isn’t just about the environment. The crisis has also shone the spotlight on corporate behaviours – both good and bad – and helped illustrate why businesses cannot simply be about making profits.
If they are going to be successful, they need to think about their wider stakeholders. Companies that have put measures in place for employees should come out of this with higher employee satisfaction, contributing to long term success.
The importance of environmental, social and corporate governance (ESG) factors in investment decisions has become clearer to me as the crisis has unfolded.
Within our practice, clients’ personal motivations are also changing to those which fit within their sustainable lifestyles, and this has been amplified in lockdown. For example, lockdown has decreased clients need to commute and increased the take up of environment-friendly hobbies such cycling and gardening.
My clients are increasingly seeking information about sustainability and responsible investing, with growing awareness of the broader long-term aspects of successful and effective investing.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
To receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, email Jason Waters, Chartered Financial Planner at Templewood Wealth jason.waters@templewoodwealth.co.uk.
Disclaimer from the author’s company: The Partner Practice is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives. Templewood Wealth is a trading name of Unipride Ventures Limited.
Jason holds a Law degree and was called to the BAR of England & Wales at the Honourable Society of Gray’s Inn. Jason has worked in financial services since 2008, starting in private banking and moving into wealth management when he co-founded a City based practice at the age of 25.
Jason is passionate about making a positive difference to people and the planet while delivering a first-class financial planning experience. In 2019, he was awarded the prestigious Chartered Financial Planner designation by the Chartered Insurance Institute (CII).
Outside of work, Jason enjoys spending time with his family and two young children. During lockdown Jason has a rediscovered his passion for cooking and tennis.
