And so, 2020 grinds to a close in all its fetid glory. What a year!
The horror of a pandemic. The joy of a (potentially) effective vaccine. The end of Trump in a blaze of untruths. The end (maybe) of the Brexit pantomime, as UK supermarkets stockpile non-perishable food and clouds gather over the sunlit uplands.
Emotions where you don’t expect them. German chancellor Angela Merkel begging the German public to follow coronavirus restrictions ahead of Christmas. US state of Georgia election official Gabriel Sterling pleading with sitting president Trump to denounce violent threats from his supporters.
But for the investment industry – aside from grappling with the Covid-19 pandemic like everyone else – 2020 has been the year when responsible investing finally came of age. It’s not a question any more; it’s an obligation. Perhaps there is a link here with the jaw-dropping failures of politics that are all around us.
Joe Biden will likely overturn Trump’s rolling back of environmental regulations and socially responsible corporate governance standards. But who will we get after Biden?
It is becoming harder to trust our political leaders. Others must find the answers to the questions of our age – just as US companies and states carried on fighting climate change while their president denied its existence.
So, net-zero by 2050: can we do it? Well, we must try. Is it enough? Almost certainly not. Recent research suggests that by 2050, all the Alpine glaciers below 3,500 metres will have melted. But still we trundle on, seemingly unable to make the radical changes that are needed.
Naturally, they are going to hurt. But we are now like addicts on the cusp of recovery: carrying on as we are will hurt even more. (The problem with that analogy is, of course, that a lot of addicts don’t recover.)
For the investment industry, the question remains of how to contribute to a greener, fairer future. It’s easy to chat about sustainability goals and ESG criteria; it’s harder to find ways to participate in the radical change we need. I recently had a look at my pension fund with a view to moving the portfolio to an ethical option. The choices were uninspiring to say the least.
The top two holdings in the higher-risk fund, in which I’m currently invested, were Apple (3.8%) and Microsoft (3.2%). In the ethical fund, the top two holdings were Microsoft (5.9%) and Apple (5.5%). Not what I was after, and so I checked out the Sharia fund: Microsoft (7.2%) and Apple (7.1%). Is this really what ethical investing should be about? Ever more big tech?
Airbnb, the most recent addition to the publicly listed roster of disruptive big tech firms, highlights the issues with these companies. Yes, Airbnb has shaken up travel, providing new, better and cheaper accommodation options for travellers. And, yes, as it has grown and become more powerful, it has helped to destroy neighbourhoods in some cities – just as Amazon, which is beyond all question a useful service, has helped shut down bookshops and deprive authors of income.
I’m neither for nor against big tech. It exists and is useful, and we must all decide how to use it mindfully. But I don’t call 10% plus Microsoft/Apple at the head of a portfolio ethical investing. Surely, we need something more radical if we are to reach the goals that we must meet.
We are capable of radical change. The Covid-19 pandemic has taught us that.
Fiona Rintoul, editor-at-large at Funds Europe
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