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.

"30 years of blah, blah, blah". That’s Swedish climate change activist Greta Thunberg’s verdict on the efforts of political leaders when it comes to their actions - or inaction, in her view, on climate change.

Whether you admire Ms Thunberg’s no-holds barred approach, or not, there is no denying that recent events - from the Australian bushfires and “worst ever” Californian wildfires in 2020 to devastating floods in China, Switzerland, Germany and on home soil - have given us all a wake-up call when it comes to climate change.

The latest report from the World Meteorological Organisation and the UK Office for Disaster Risk Reduction makes no bones about it - climate change and increasingly extreme weather events have caused a surge in natural disasters over the past 50 years.

Right now, in the midst of a potential global fuel crisis, everyone might currently be focused on getting hold of petrol and diesel. But when prices start to reach new highs when you do get to a fuel pump that hasn’t run dry, and with households likely to have to pay through the nose to heat their homes this winter, then the conversation is more likely to shift to our over-reliance on ‘dirty’ fossil fuels.

The UN’s Intergovernmental Panel on Climate Change (IPCC) report published in August, warned that global warming is dangerously close to spiralling out of control, but while some changes to global climate are now locked in, rapid action to cut greenhouse gas emissions could limit some of the impact.

It is not too late and perhaps just as importantly, the time has come for sustainable investing and ESG matters to climb up the agenda for investors.

Put simply, sustainable investing involves investing your money with an awareness of its wider impact. It’s often referred to as ESG investing, which looks at how the companies you are investing in stack up against environmental, social and governance measures.

The potential implications - and investment opportunities - of the climate emergency are really starting to sink in for many investors. And prompting more and more people, when they save or invest, to ask whether their money is doing more good than harm.

And plenty of analysis shows that companies that boast strong ESG credentials outperform those that don’t. This was particularly true last year during the worst of the pandemic. There are a couple of reasons for this. The first is that being a good ESG company is a kind of proxy for just being a good company, full stop. It’s no surprise that companies that are socially responsible, diligent about corporate governance, and environmentally friendly tend to be the sort of high quality, well-managed companies that we all want to invest in.

The second is that sustainability is itself a good, long-term investment trend. The environment, for example, is high on everyone’s agenda right now. Companies that can provide solutions to the environmental crisis are likely to be good ones to invest in if you’re looking for long-term growth. They’re sustainable in two senses - socially and financially.

Timely too is this year’s Good Money Week, which starts on 2 October and runs until 8 October. It is all about highlighting the sustainable and ethical options open to us all when it comes to our finances, so we can all have a positive impact on the environment and society without sacrificing wealth.

From climate change to child poverty, housing shortages to low wages, the week is aimed at showing us all how we can make money and make a difference. Go to Good Money Week to find out what’s happening and learn more.

We all know what we can do as consumers, from recycling to switching to a renewable energy provider, but as an investor there are also steps you can take. First of all, check how your pension is invested. Is it invested ethically? Trillions of pounds in pension funds are invested each year and according to one report placing your pension money in green investments could have 117 times the impact of someone limiting themselves to one return flight a year.1 

If you invest in a SIPP you get to take control of your investments and can pick and choose to invest in funds that invest in sustainable and ESG-minded companies.

Find out how investing your pension fund in a sustainable way can make a real difference

Secondly, use your annual ISA allowance to adopt a sustainable or ESG-focused approach.

With a Fidelity ISA you can invest from as little as £25 a month into a range of funds. Three to consider from our Select 50 of recommended funds are the Brown Advisory US Sustainable Growth Fund, the Stewart Investors Asia Pacific Leaders Sustainability Fund, and the FP Foresight UK Infrastructure Income Fund.

Additionally you may want to consider the Baillie Gifford Positive Change Fund which was one of the five most popular funds bought by Fidelity Personal Investors in August.

Find out more about sustainable and ESG investing here


1 Nordea, 2021

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55. Select 50 is not a personal recommendation to buy or sell a fund. The Brown Advisory US Sustainable Growth Fund invests in a relatively small number of companies and so may carry more risk than funds that are more diversified. The FP Foresight UK Infrastructure Income Fund may use financial derivative instruments for investment purposes, which may expose the fund to a higher degree of risk and can cause investments to experience larger than average price fluctuations. The FP Foresight UK Infrastructure Income Fund investment policy means it invests mainly in units in collective investment schemes. 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 a Fidelity adviser or an authorised financial adviser of your choice.

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