As Global Climate Events Escalate DIY Investors Strongly Support ESG Funds

Recent research conducted by interactive investor, the UK’s second largest DIY investment platform, found that those investing within an ethical framework have injected record sums into environmentally focused funds and investment trusts – by Jemima Reeves

Three-quarters of funds and investment trusts bought from the Interactive Investor’s ethical investing long list over the year to June have an environmental focus; closed-ended investment companies were to the fore with Greencoat UK Wind heading the list, followed by Gore Street Energy, the Renewables Infrastructure Group and NextEnergy Solar Fund.

In announcing its findings, analyst Keith Bowman said: ‘Our data could suggest that people investing within an ethical framework are taking an ‘it’s the environment, stupid’, approach to ethical investing.

‘But there’s more to it than that. If you look at the yields on some of the renewable energy-focussed investment companies, these selections could be every bit as much about income. Greencoat UK Wind, for example, is currently yielding about 5%, Gore Street Energy around 6%, and Next Energy Solar a heady 7% – and perhaps not surprisingly companies in this sector are currently tending to trade on premiums. If you want income in the investment company sector, you tend to have to pay a bit more for it.

‘But no investor should invest based on yield alone – it’s a dangerous game. Clearly the renewable energy theme is one that investors hope has legs. And for those of us impatient or cynical about the speed of government change, these environmental plays could also be seen as a way to take some direct action.’
 
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The ABC of ESG 

Investing Basics: ESG Investing

Investment Trusts – ESG: Nice Guys Finish First

Ethical Investing: ESG Investments Deliver Strong Returns
 
Increasing awareness of environmental issues, and climate change in particular, has led to an explosion in interest in ESG as investors have sought to put money into funds that generate returns as well as benefit society.

According to Morningstar, funds that invest according to ESG principles attracted net inflows of more than £50bn globally between April and June.

Climate change was a main thread of the recent G7 Summit in Carbis Bay and in November the UK will host the UN Climate Change Conference (COP26) in Glasgow.
 
ESG: Will the world turn greener after COVID-19?
 
As part of its ‘green revolution’ the UK has pledged to be carbon neutral by 2050; Joe Biden has pledged $2trn to stimulate renewable energy with a similar target date, and China is aiming to be carbon neutral by 2060.