The writer is the former Chief Executive of UK Finance
What is not to like about a digestible 200-page book that offers the reader power to “help to combat climate change and feel a sense of control in an uncertain world”? When I cannot even get my local council to deliver the special bags required to take away the recycling generated by a family of five living in London under severe Covid restrictions, power is what I need.
The premise of Investing to Save the Planet is that most FT readers have that power as they are likely to have some savings, pension or other investments at their disposal. In common with many readers, I have struggled to make sense of how I can ensure my savings are not only used in line with my risk appetite but also how my potential investment universe can be filtered to exclude companies that do not take their wider societal responsibilities seriously enough. If I could identify this filter, do I have to accept lower potential returns?
As Alice Ross — an FT journalist — puts it, in charting the history of so-called responsible investing, “everyone in finance is waking up to the fact that climate change is going to change the world, so we better change our investment portfolios as well”. There must surely be some irony intended by the author in the first part of her statement?
Chronicling this awakening, perhaps real but certainly needed, she guides readers — the retail as opposed to institutional investors — through the increasingly confusing range of acronyms and labels that have sprung up: ethical investing, SRI (socially responsible investing), PRI (The UN’s Principles for Responsible Investment), TCFD (Taskforce on Climate-Related Financial Disclosures), GHG (greenhouse gases, not a hedge fund), ICE (internal combustion engine, not a financial marketplace) and so on.
Offering a primer to socially responsible investing, Ross focuses on the environmental, as opposed to social or governance, aspects of ESG investing. If the hard-nosed professional investment community is taking it seriously, she argues, then retail investors should feel more confident that the trends likely to cause “significant reallocation of capital” (per Larry Fink, chief executive of BlackRock in January 2020) might not just be self-promoting “greenwash” but could be a source of investment returns delivered in a climate-friendly manner.
She attempts to offer something for even the most inexperienced investors. The difference between equities, bonds, venture capital, angle investing, impact investing and philanthropy are explained in the context of their role in tackling climate change. The role of billionaires (not, presumably, Ross’s target audience) is covered and in so doing perhaps reveals the author’s preoccupations — “however one may feel about whether billionaires should be allowed to exist, they do have a role to play in energy transition”. And, “more modern billionaires are trying to use their wealth to help find solutions — though it would probably help their image if they took fewer private jets along the way”.
The book tackles the twin themes of divestment and engagement as tools available to investors and their pension adviser and or fund manager proxies. Over several anecdotal chapters, Ross explores energy investing and the energy transition under way, green transport, the food revolution and the circular economy. In each case, a simple summary of how the retail investor can engage with them by risk appetite is provided — I will be thumbing these chapters again as new ideas emerge on my personal climate change radar. Her focus on stories involving individuals, companies and ideas ensures the themes explored are approachable.
The critical role of government and standard setters, and of international collaboration and co-ordination, provides the final chapter. So much hinges on effective and joined-up thinking at this level — could “building back better” post-Covid really become the global rallying cry that accelerates united and effective inter-governmental action?
Ross’s book is a helpful aid that should leave the reader with a greater sense of what they can do (including take professional investment advice, which her book does not profess to offer) to take some personal control of the climate agenda.
Investing to Save the Planet. How Your Money Can Make a Difference by Alice Ross, Penguin Business, 240 pages, £14.99
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