Blueberry Financial and EQ Investors

Madeleine 
Hi, I’m Madeleine from Blueberry. I’m here with Damien from EQ Investors to talk about sustainable investing. So, Damien, can you just introduce yourself to everyone please?

Damien 
Sure. Hi, Madeleine, it’s great to see you. I’m Damien Lardoux, and I am a portfolio manager at EQ Investors. At EQ Investors, we focus on sustainable investing – that’s all we do – and I’m very excited to talk about the topic with you today.

Madeleine 
Thank you very much for coming. Let’s kick off by talking to everyone about, “Why should anyone invest sustainably?”

Damien 
That’s a great question. I think there are two main reasons. The first one is that some of your clients would like their social and environmental preferences to be taken into account with their investments. Sustainable investing could help them support companies with the vital and healthcare themes and these are areas that they would like to support, so that could be one reason. The second reason is that businesses that are innovative and developing social solutions to tackle the many social and environmental challenges we face are benefiting from strong tailwinds. There is a growing demand for those products and, as a result, those businesses can do really well over the long term. So, we believe that, financially, there’s also an incentive to support those businesses and to invest sustainably.

Madeline 
And how does it compare in terms of performance? Because a lot of people would like to do their bit for the world. They hear “ESG”, and it’s such a buzzword at the moment, but they think, “How’s it actually going to work out performance-wise?”

Damien 
You’re right. This is the question we get asked the most, and I think it’s a great question. We’ve been managing portfolios for 12 years now, and what we’ve been able to show is that over the long term, people will get similar returns to a traditional portfolio. However, it’s fair to say that in the short term, there can be a little bit of performance divergence. Your sustainable portfolio might not perform exactly like a traditional portfolio, because it doesn’t invest in the whole of the market; it invests in a section or a portion of the market, where you pick out the companies that are innovative and developing solutions to the many social, environmental challenges we face. So, it can be a bit different in the short term, but over the long term you can get similar returns to traditional portfolios. Also, if you think about the longer term and the issues we’re facing in terms of more and more healthcare issues and climate-related catastrophes, a portfolio that is taking those risks into account and limiting the exposure to those risks, in our opinion, should fare better in the coming decades.

Madeline 
When I talk to my clients about ESG, I talk to them about the fact that we’re getting rid of the evil companies in their portfolio. So, are there specific sectors or companies that you avoid?

Damien 
You’re absolutely right. When we think about where to invest, we think about which framework we’re going to use. We use the United Nations Sustainable Development Goals. It represents the 17 most pressing issues to be tackled by 2030, and it’s a very ambitious programme. And our goal with the positive impact portfolios is to invest in companies that are providing solutions through their products and services, that are supporting those goals, and not invest in the ones that are going to make reaching these goals harder. So, typically, a tobacco company, as we know, is linked to a number of health issues and therefore would not feature in our portfolio because it’s making the reach of the UN goals, and especially the number three: good health, much harder to get to. Another sector that we would not invest in would be, for example, oil and gas expression and production. We would not invest in the likes of Shell or BP, for example. The reason for that is because it’s well-documented that we need to start reducing our consumption of oil and gas if we want to meet the Paris Agreement and get to net zero by 2050. Those companies are not aligning their businesses to this target; as a result, they would not feature in no portfolios, because they’re part of the problem. There are many sectors, not only the classic sins I’ve just mentioned, tobacco, alcohol, but many more, all the sectors, all the companies that are part of the problem. We were having a conversation earlier on around social media, and Meta/Facebook will equally be a company not featuring in a portfolio, because we think it’s a company that is part of the problem, not part of the solution.

Madeline 
Now I wanted to talk about who we’re using for the sustainable part of our portfolios. So, Damien, can you talk about why EQ is different? Because there are lots of other sustainable fund managers out there.

Damien 
Sure. I think one of the key differences with EQ Investors is the number of years we’ve been running sustainable portfolios, for over a decade. We have a 10-person-strong investment team focused around running sustainable portfolios. We’re also funding a big operation where the idea is we should care about all our stakeholders and try to make a positive impact on them. Finally, EQ Investors is partly owned by a foundation – the EQ Foundation – which means a portion of our profits is gifted and donated to charities.

Madeline 
You’re downplaying it a little bit in terms of how much you care. All of you really care about what you’re doing. Do you think you can talk a bit about going to company AGMs as well? You’re not just sitting in your office – you’re actually going out there and making a difference.

Damien 
You’re absolutely right, we’re clearly passionate about sustainable investing and sustainability in general. One of the key reasons for us to go out there is that we realised that to drive change, we need to think about the whole value chain from the companies, down to the asset manager. We found that annual general meetings were losing a bit of their interest, and that, we think, is the wrong approach because when you go to an AGM, you see the management and you’ve got access to the board members as well. We go there to tell the board management their issues that they need to care about, because there is no perfect company. Even a great company can do better and that’s what we encourage them to do.

Madeline 
Great. Hopefully that’s given you all a brief summary of why we do sustainable investing here at Blueberry, so that not only can you shine your halo that you’re doing your bit for the planet, but also it’s really good from a financial planning point of view for performance and growth. Thank you very much Damien for taking the time to come and talk about sustainable investing. Really summarising what he said, we use EQ because they’re awesome. Thank you very much for watching and listening and if you want to know any more, then please get in touch.