COP26: Action Not Talk?

COP26: The Pugilists and the Crowd

COP26 has been dubbed our last best chance to save the world.

In the red corner, we have world leaders who have had at least 25 opportunities to save the planet before now. The high-level nature of their conversations and the complex politicking involved in the negotiations are important in setting broad aims, but often end up with the lowest common denominator solutions.

And in the blue corner we have individual activists, like Greta Thunberg, who have been beating the drum for global action. They are impassioned, have inspired awareness about the scale of the challenge we face and have agitated for change, but without the ability to put into practice the change they want to see at scale.

And surrounding them — us. The ticket holders. The money that makes the world go around. The small business, the large conglomerates and all the consumers and clients that make up the respective supply chains. The individuals and businesses that can enact the changes needed to address the climate crisis and meet the high-level goals set out at the conference.

We have the skills, expertise and capital to channel investment into businesses that are supporting new technologies and business models in all fields whether finding efficiency and sustainability in agriculture, food and nutrition, democratising and digitising financial services, catalysing revolutions in mobility, or the green energy transition.

So what action?

Day 3 of COP26 was focused on the power of the private sector. Day 5 on youth and public empowerment. This is where the optimism at COP26 is centred.

In impact terms, the single biggest step you as an individual can take is to put your investments into businesses that are prioritising a no-compromise approach to business — whether that is through your direct investments, indirect institutional use of your savings, or pension funds. Make My Money Matter has calculated that in fact it is 21 times more impactful than stopping eating red meat, flying less or even driving an electric car. It is the single most impactful thing you can do.

What is even better is that it isn’t hard to achieve. Collective pressure has meant that most major financial institutions have at least accessible investments that at least exclude businesses that are doing harm.

But why?

Not because it is the right thing to do. Because it will make you wealthier.

The idea of trading profit for purpose or vice versa is dead. For every business out there that is not doing this, there are examples of businesses at the same scale that are — and succeeding. Don’t just take our word for it.

How about a bank that has been serving customers for 300 years?

At one event I attended Peter Flavel, CEO of Coutts explained how the 300 year old institution had taken the decision to become a B-Corp and all that entailed. He asked his clients — ‘do you want us to include ESG and impact metrics in our funds?’ 75% yes, 25% said no. Of the 75%, half were prepared to accept a reduction in returns, half were not.

As you would expect from a bank that has been around centuries they were deliberate. And certainly in no rush to alienate their clients. So they ran a series of ESG and impact filters on their funds for three years in the background. They discovered that the impactful and ESG filtered returns were better. So they introduced them, and became a B Corp. No-compromise investing. They didn’t lose a client, and they firmed up their returns and the robustness of their portfolios without skipping a beat.

Or one of the biggest investment banks in America?

Morgan Stanley’s perspective from their 2020 sustainability report:

“We found that sustainable funds provided returns in line with comparable traditional funds while reducing downside risk. What’s more during a period of extreme volatility, we saw strong statistical evidence that sustainable funds are more stable.”

“The findings debunk the myth that there is a performance penalty associated with ESG investing,”

​Hortense Bioy, director of passive strategies and sustainability research at Morningstar

Want a broader take?

2020 research from data provider Morningstar examining the long-term performance of a sample of 745 Europe-based sustainable funds shows that the majority of strategies have done better than non-ESG funds over 1, 3, 5 and 10 years.

Where does Enver fit in?

Our vision is to see no-compromise investing become the enduring investment practice. And to achieve that we are driving liquidity and accessibility to those investments.

We work globally, especially in markets where scalability of profit and environmental and economic benefit go hand in hand. We have been working with hundreds of businesses around the world that all have tangible environmental and social priorities alongside their financial bottom line — whether that be a green logistics company in Mexico, an eco-marine construction company in Israel, an edtech in Brazil servicing the poorest to enable life changing career development, or a geothermal energy company in Kenya. The businesses we work with are attracting top tier investors because they meet the criteria for outstanding potential returns required by GPs and their LPs.

And beyond our own financial catalysis, I was at COP to work with like-minded investors and financial firms too. We work with investors who want to find better returns and know that investing without compromise is the way to achieve it. Some of the strongest performing in the world are differentiating with impact to drive alpha. Stay tuned for our first digital services being launched in the coming weeks.

The biggest thing that this COP26 can do is to be a catalyst to business and individual choices. To give these actors the confidence to forge ahead and channel investment into interventions that will help us reach our climate goals and grow our collective economic strength. Even Larry Fink tells us the next 1000 unicorns will be climate unicorns. So here’s our challenge to you. For every business you are considering investing in, or a financial product you are investing in that you think will outperform without including any environment, social or economic development targets, look for an alternative. We and our colleagues can show you equivalent assets with these additional metrics baked in that have the potential to perform better. Test us — the world is ready to prove us right.

Marc Buchner is the CEO of Enver. Follow him on Twitter @_MarcBuchner and @Envercapital