Today we’re all more aware of how our lifestyles impact the world around us. In everything we do, from how we work and travel, to what we eat and what we wear. There’s a growing demand for accountability and sustainability. It’s also becoming increasingly important to factor in when it comes to investing and it’s big business.
Alice Early is a fashion designer whose design practice is dedicated to environmentally and socially conscious craftsmanship.
Emma-Lou: Alice, sustainability is at the heart of your design practice, in everything from the buttons you use to the boxes you package the garments in.
Alice: Yes I use 100% organic cotton, which is certified by GOTS - the Global Organic Textiles Standard. This standard is really important to the farmers working on the land as no pesticides or toxic chemicals are used in the production and it is also covered by the International Labour Conventions which covers everything from minimum wages, conditions for workers to work in and discrimination.
Emma-Lou: Presumably these materials aren’t cheap to source though?
Alice: They’re not cheap, they do cost more than conventionally harvested cottons, but people are receptive to them and they are prepared to pay the price. I think that if something is too cheap someone else has paid the cost.
Emma-Lou: Was there something in your previous experience that prompted you to take a sustainable approach?
Alice: Yes, having worked in the industry for 10 years, I’ve seen a huge amount of waste on the production line and I think I wanted to look into the sourcing of materials and see how I can bring that into a more sustainable product.
Emma-Lou: Alice, thank you very much.
Alice: You’re welcome.
Businesses that don’t put sustainability at the heart of their proposition are missing a trick, but they’re also likely to fall foul of investors who are increasingly aware that sustainability has to be at the core of their investment strategy.
Emma-Lou: Ned, the big question, what is sustainable investing?
Ned: So this is a hotly debated topic and there’s no correct answer because there is no set standard of what sustainable investing really means. To us at Fidelity we really think of sustainable investing as a set of principles that we’ve added into the investment process to help investors make better decisions to deliver a financial return and total social return.
Emma-Lou: How does an investor who wants to invest sustainably know they are investing sustainably?
Marty: It breaks down into three broad areas. There’s environmental questions, there’s social questions and then there’s governance questions and there’s detailed ways investors can analyse each of those criteria to ultimately think does this meet sustainability criteria, does it match with my fund objectives and when the two of those align, you’ve got a really good sustainable investor.
Emma-Lou: Does sustainable investing come at a price?
Ned: I think we’re pretty convinced that we can deliver total social return without giving up any financial return. We think we can deliver total social return on top of the financial return and that’s the promise we think we can make.
Emma-Lou: So it isn’t a case of one or the other? It is possible to have both?
Ned: It is possible to have both and we think that the best companies who invest their capital sustainably are going to be the companies that are financially going to perform the best.
Emma-Lou: Sustainability is becoming prevalent in all walks of life, are there any changes you’ve noticed when it comes to investing?
Marty: It’s so fast it’s hard to keep up, the number of client queries that we have about sustainable investing funds has dramatically amplified over the last couple of years and all regions of the world too which is really interesting. It’s spiralling in a good way.
Ned: One of the things that is so exciting about working at Fidelity is that the analysts that we work with meet and engage with companies 16,000 times per year. It’s once every ten minutes and so the amount of opportunity that we have to engage with those corporates whether it’s on issues of remuneration, whether it’s on issues of environmental risk, we get to have those conversations every single day.
Investing with an eye on the longer term is always a smart move. Investing with an eye on the future of the planet and the generations to come is even smarter.