Sense and Sustainability - March 2022

Having to prove ESG investing's credentials

Despite war in Europe and its fallout on stock markets asking questions, ESG investing still has a vital role to play and is here to stay. Although returns from ethical funds fell short of those from conventional funds last year, inflows increased from $542bn to $649bn.

PRIORITISING THE PLANET

Progress was made in climate change mitigation, with Tesco to stop selling baby wipes containing plastic, Norway’s Hurtigruten unveiling sustainable cruise ships ‘fit for Greta’ and Volkswagen announcing electric camper vans. As a Welsh solar farm exceeded expectations in powering a Swansea hospital, HSBC slashed its targets for balance sheet-financed emissions of oil, gas, power and utilities firms. In the US, Biden has focused on finalising a new ‘social cost of carbon’ in 2022. Edison client Renewi saw recyclate prices drive a further FY22 upgrade, while our fourth in a series of thematic reports on international trading company BayWa looked at supporting sustainable agriculture. As environment secretary George Eustice said climate change could be good for British food, Edison initiated research on MeaTech, the first listed cultured meat company.

FOCUSING ON SOCIETY

As Ketanji Brown Jackson became the first African-American woman US Supreme Court judge, plans were announced for America’s first footwear factory with Black owners and designers and US companies added social and environmental targets to the criteria for executive bonuses. As a Twitter bot was set up to expose gender pay gaps on International Women’s Day, Edison examined the scoping of gender inequality in the workplace and initiated research on Context Therapeutics, a Nasdaq-listed biopharma company developing novel therapeutics focused on oncology indications that mainly affect women.

PRIMING AREAS FOR ACTION

Much more needs to be done, with a think-tank warning that removing carbon dioxide from the air is essential for there to be any chance of meeting global climate targets and the Commons Public Accounts Committee saying the government’s plan to achieve net zero contains no details on how it will be funded. It may be time to look at the huge negative impact the NFT boom is having on the environment, with a recent sale of a piece of crypto art consuming as much energy as its studio uses in two years. And, if human hair mats are capable of cleaning oil spills, why don’t big companies use them?

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