ESG Investing

dont_look_now

richardsmith911 said:

Thanks, guys, regards to L&G future world - this is more greenwashing as it invests into shell? 

I would agree. But to be more charitable to L&G, ESG means very different things to different people, so you need to read up about the remit of any ESG fund you're considering, to find out whether their approach to ESG matches what you're looking for.

Username999

richardsmith911 said:

Thanks, guys, regards to L&G future world - this is more greenwashing as it invests into shell? 

"Shell wants UK to accelerate ban on fossil fuel car sales to 2030"
https://thedriven.io/2020/07/20/shell-wants-uk-to-accelerate-ban-on-fossil-fuel-car-sales-to-2030/

jaybeetoo

There are loads of ETFs for ESG screened, ESG enhanced and SRI.  Go to https://www.justetf.com/uk/find-etf.html and search.

Malthusian

Username999 said:

richardsmith911 said:

Thanks, guys, regards to L&G future world - this is more greenwashing as it invests into shell? 

"Shell wants UK to accelerate ban on fossil fuel car sales to 2030"
https://thedriven.io/2020/07/20/shell-wants-uk-to-accelerate-ban-on-fossil-fuel-car-sales-to-2030/

To be fair, calling on a Government to pass a law in several years' time that it knows perfectly well won't happen, and that they would lobby against if it did get to green paper stage, doesn't change the fact that Shell produces fossil fuels.

It's like the head of Imperial Tobacco (sorry, Brands) saying smoking should be totally banned. Right on bro. Effect on profits = zero.

If the world moves to renewables en masse then Shell will do its best to pivot to renewables as no company wants to go bust. Whether it would succeed or not nobody knows, that's the fun of the stockmarket. In the meantime however, they are the baddie from an ESG perspective.

Sailtheworld

Monevator has an article this week about direct indexing https://monevator.com/

It's something I'd be interested if it offered a cost effective way to buy VWRL minus tobacco or minus my employer as an example.

richardsmith911

I mean don't get me wrong, many people say that by virtue of funds divesting their ‘dirty’ holdings, dirty companies will have their financing cut off - that is total rubbish. When you buy a stock, you do not give money to a company but to the entity that owned the stock before you. Companies only get cash at the time of issuance. Also, If they are smart they either give themselves a very long period of time OR they do it first and then announce it. 

My main point is, are there any pure funds currently?

Thrugelmir

Pure in what sense. As has been said earlier ESG is a broad church. 

bowlhead99

richardsmith911 said:

I mean don't get me wrong, many people say that by virtue of funds divesting their ‘dirty’ holdings, dirty companies will have their financing cut off - that is total rubbish. When you buy a stock, you do not give money to a company but to the entity that owned the stock before you. Companies only get cash at the time of issuance. Also, If they are smart they either give themselves a very long period of time OR they do it first and then announce it. 

My main point is, are there any pure funds currently?

Thrugelmir said:

Pure in what sense. As has been said earlier ESG is a broad church. 

Thrugelmir is right to question it, as everyone has their own definition of what is meant by ethical investing or environmentally friendly investing or investing in accordance with their own ethics, morality or environmental, social or governance themes. So it can be hard to identify a 'pure' fund that only does exactly what you want it to do. 

For some, Shell is perfectly acceptable because it is energy companies with Shell's tens of billions of dollars on their balance sheet that can afford to make those massive investments in cleaner or renewable energies ahead of such things actually being very profitable.

For some others who consider Shell dirty, a fund that simply skipped Shell and other fossil fuel producers / explorers or climate-unfriendly businesses when building a portfolio would be as 'pure' as they want.

While for others, a fund that simply avoids climate-unfriendly businesses by screening them out of the selection process is not good enough. Instead they want to be positively screening for companies doing environmental or social 'good'. So the portfolio should not just avoid the bad actors but also avoid the so-so actors and only employ the good actors - each holding must somehow contribute to a more sustainable or inclusive world. 

The latter approach is more 'righteous' and perhaps is the sort of thing you said you wanted in your OP. But it may end up concentrating the portfolio in specific sectors or particular types of businesses within those areas, and not being particularly well 'balanced' across industries and thereby being more volatile or less able to cope with different overall market conditions as we go forward into the future, than a more traditional portfolio which is not constrained so much by ethical considerations.

So to an extent it depends whether the idea to "invest my money in more climate-friendly companies" means, to you:
(a) invest (all of) your money exclusively in companies which are more climate-friendly than the average company
(b) invest (some of) your money in more (a greater quantity of) companies which are climate friendly instead of taking than the standard mix from an average global equities fund

If (b), which is likely easier to keep a balanced portfolio, then do you want to achieve a greater allocation to friendly companies by deliberately shopping for friendly ones over average ones and unfriendly ones, or achieve it simply by excluding below-averagely friendly ones.  (i.e. is it fine to hold non-unfriendly companies or do they actively need to be friendly) 

richardsmith911

I guess pure was a bit vague and most companies are trying to go more sustainable and climate-friendly but it's not an overnight transition. I just want to find a fund that is in line with this and can give back strong returns? - https://www.etfexpress.com/2020/08/13/288536/2020-what-does-global-pandemic-teach-us-about-esg-investing

dont_look_now

richardsmith911 said:

I guess pure was a bit vague and most companies are trying to go more sustainable and climate-friendly but it's not an overnight transition. I just want to find a fund that is in line with this and can give back strong returns? - https://www.etfexpress.com/2020/08/13/288536/2020-what-does-global-pandemic-teach-us-about-esg-investing

Well, you're still being a bit vague

I said that you need to investigate whether the ESG funds you're considering have an approach to ESG which matches what you want. But first you need to know what you want

There's nothing wrong with not knowing what you want. But sometimes, you need to come to a decision about it.