The theme of this year’s World Environment Day is air pollution, with China hosting the occasion. A by-product of increasing urbanisation and industrialisation, air pollution continues to impact negatively both the environment and human health. Each year, asthma kills 180,000 people worldwide, with hundreds of millions more affected by the disease. While governments, including those of the EU, are responding, the cost of maintaining clean air is relentless, measuring around US$50bn worldwide.
The scale of how to adequately fund the world’s environmental challenges is an undeniable problem not only for governments but investors too. Increasingly, however, it is becoming possible for retail investors to find a way of contributing more towards societal and environmental challenges, while, at the same time, aiming for a long-term financial return. Positive impact investing aims to combine profit with purpose. Several of the companies we hold are working hard to provide a better environment.
- China Everbright International’s operational activities in the field of waste management and water environmental management mean the company has aligned itself with China’s 13th Five-Year Plan, calling for more stringent environmental protection measures.
- Danish company, Ørsted, is leading the charge in Europe in reducing reliance on dirty energy sources and driving a shift towards clean energy via offshore wind farms.
- ALK-Abelló, is another Danish company specialising in allergen immunotherapy in children as a means of reducing asthma. All three holdings demonstrate how investors can seek a positive direct or indirect impact on the environment, as well as a financial return.
With the onset of greater environmental and societal awareness, backed by increased regulatory change, responsible investing is now a key item on the agenda of governments, institutions and everyday investors. No one will deny, environmentally, there is so much more to do, but the drive towards aligning sustainable and financial goals means this area of investing can no longer be assigned a ‘fad’ status. It is part of a growing trend that is here to stay.
John William Olsen, manager of the M&G (Lux) Positive Impact Fund
