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Climate protests are changing companies

Ed Monk

Ed Monk - Fidelity Personal Investing

The coming days will see Extinction Rebellion activists do their best to disrupt the streets of London in protest at the lack of action on climate change.

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Coverage is bound to pit the protestors against the capital’s commuters and business owners who stand to be seriously inconvenienced by blocked roads and bridges around the city. We’ll all be asked to pick a side in the row.

You don’t need to sympathise with the protestors or agree with their entire agenda to understand that their cause is gathering momentum. We’ve seen protests before, of course, but what’s different this time is the sense that the corporate and political worlds can be made to listen.

Politicians may talk disapprovingly of the most disruptive protestors, but they will be wary of alienating millions of younger voters for whom climate change is the number one priority.

Companies, too, are feeling the heat. Oil major BP last week saw its sponsorship of the Royal Shakespeare Company ended by the theatre after targeted online campaigning, while Shell has been told that a similar deal with the National Theatre will not be renewed when it expires in two years’ time.

Extinction Rebellion may be the most extreme expression of impatience for action on climate change but underneath it is a groundswell of mainstream opinion that is forcing change in the corporate world.

A ban on using plastic straws will come into force in England next year but food outlets are already stocking paper versions. You may have also noticed the return of scales to the fruit and veg section of your local supermarket, there to allow the purchase of loose produce that requires less plastic packaging.

On the same news bulletin that covered the start of the Extinction Rebellion today were the comments of Alan Jope, chief executive of Unilever, unveiling a pledge to halve by 2025 the 700,000 tonnes of plastic it uses each year to package goods like Marmite and PG Tips. I’m sure Mr Jope has the highest environmental ideals in mind when he makes this pledge, but I’m also sure he is acting in the interests of his company and doesn’t want to be caught on the wrong side of onerous rules on plastic use.

The stakes for all companies are rising. Consider the concept of ‘flight shame’ - where travellers are being urged to reassess their plans to cut down on polluting air journeys. What are the implications for fine margin businesses like airlines of seeing their market stymied in this way? What happens when large companies insist their staff cease all non-essential business travel on environmental grounds?

It’s these questions - as well as genuine concerns for the world, of course - which are pushing more investors to pursue a sustainable approach. Environmental concerns are just one arm of ESG investing - which stands for Environmental, Social and Governance. SRI is another acronym you will hear - that’s Socially Responsible Investing.

Dozens of funds now exist promising to invest with these aims in mind. Their approaches can differ markedly - some will apply broad screens to filter out companies that operate in certain sectors, or profit from doing certain activities. Others will be far more discerning, investing only in enterprises they believe do good in the world.

What is ESG investing?

Important information The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Please note that the Investment Manager’s focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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