In our Blueberry Portfolios, our investment breakdown stands as follows:
20% in ESG funds
80% in traditional investments
Some clients, myself included, allocate more than 20% to ESG funds, with my personal investment at 50%.
Whatever the amount, how has it done and should we be investing in it?Â
Up until the last year, the ESG funds that we use via EQ Investors Positive Impact Portfolios were performing the same as the traditional investments. Then the world went a bit funny. Russia invaded Ukraine, oil prices went up, inflation had some âfunâ and interest rates went up and up.
ESG funds do not invest in oil as it is part of the âevilâ that they avoid, deemed environmentally detrimental. EQ has zero exposure to fossil fuel reserves, no coal, gas or oil. This led to missed opportunities for growth amidst the recent oil price surge.
Are the Magnificent Seven Evil?
There has also been a lot of growth in technology stocks recently. The main players have been dubbed the Magnificent Seven and are Apple, Microsoft, Amazon, Nvidia, Meta Platforms (they own Facebook), Tesla and Alphabet (they own Google).
Our ESG funds do not invest in Meta due to their big data breaches and Amazon are known for not treating their staff particularly well, so they donât get a space, and neither does Alphabet for ethical concerns.
Donât even get my started on how Facebook and other social media platforms are constantly using science to keep us uselessly hooked on their products, wasting our time and lives. Watch the Social Dilemma if you want to understand more. Anyway . . .
However, our ESG funds do invest in companies such as Tesla and Microsoft, acknowledging Tesla’s environmental efforts with electric cars, even though it is Elon Musk who runs it, and Microsoft’s commitment to climate action under Bill Gates’ leadership.
Missed Growth, but more opportunity to come?
We are currently spending about $1.6 billion, but it needs to be more like $5 billion+!!
Current investment levels are not enough to limit global warming to 1.5%
We need to spend more money on green technology to make this happen.
Companies that tick the S for social in ESG and look after their staff more, are often the ones that do better too and their staff care about the company they work for. So it isnât just about the environment, but also about how a company is run and how they care for everyone and everything around them.
Did you know that WH Smithâs stores are all carbon neutral?! They have been increasing their range of recycled, plastic free supplies, as one of their many ways to achieve this. So they are a good ESG investment for our portfolios.
Even Coca Cola, who are known for generating so many plastic bottles that canât / donât get recycled, are having to relook at their strategy. They want to be net zero by 2050, like their peers. This is great as one of their strategies is to use more aluminium cans, which are not only infinitely recyclable, but are produced by Ball Corp, who are in our ESG funds. Double points!!
China is spending more money than the rest of the world on green technology. Their electric car and solar panel sales have gone crazy in the last few years, as they want to stay ahead of the game.
Summary
ESG funds have had a little underperformance amidst economic turbulence, but they will keep performing as overwise our planet is going to get very hot, very soon and we cannot let that happen.
