Sustainability/Environmentally Friendly Funds e.g. Jupiter Ecology

mither_2

Hi All,

With the increased focus on the environment (as there should be) I have been looking for funds that are investing in companies within this sector. 

The only fund that i have come across is Jupiter Ecology. Some of the companies within their top 10 holdings are familiar to me and should be well positioned in the future (wind turbine manufacturers, renewable energy developers etc) but I can't find any others to compare the fund against? 

Does anyone have experience in investing in such funds? Are there others that are worth checking out? 

Thanks! 

JohnWinder

Would you say you're seeking such a fund to meet the requirements of your values/beliefs, or is it sufficient reason that this flavour of investing may outperform a 'non-environment' option?

dunstonh

Lots of funds out there meet generic ESG criteria.   If your ESG requirements are a bit more specific then funds that meet that will be fewer in numbers.  However, you should be able to find plenty of funds to build a suitable ESG portfolio that meets your views.

jamesd

There are fund lists at say https://citywire.co.uk/funds-insider/sector/ecology-funds/i3744/?periodMonths=12&page=1 but the problem is that you've selected a fund that fails my ethical investment tests and maybe it doesn't meet your desires (30% invested elsewhere) either.

That's the problem: the details you need to determine whether a fund is what you want tend to be within hundred page fund prospectuses. Here's the headline objective:

"To provide capital growth with the prospect of income, over the long term (at least five years) by investing in companies whose core products and services address global sustainability challenges"

Yet here's a snippet from the 2021 annual report of this one, my bold:

"Jupiter Ecology Fund Screening and Criteria Summary

Introduction

The Jupiter Ecology Fund has a global growth remit and focuses on companies providing solutions to environmental and social problems. Companies must meet both our comprehensive financial assessment and environmental and social criteria and for the Jupiter Ecology Fund this includes looking at a full range of ethical exclusions.

Ethical and Environmental Screening

Ethical and environmental screening for the Jupiter Ecology Fund is undertaken by Jupiter’s sustainability analysts who specialise in the environmental and social performance of companies. Companies are invested against a set of ethical and environmental criteria summarised below. Additional research is provided by external research provider Sustainalytics.

Ethical and Environmental Criteria Summary

The Jupiter Ecology Fund invests in companies providing solutions to environmental and social problems, focusing on companies which respond to environmental challenges by developing a product or service which provides sustainable long term solutions.

The Jupiter Ecology Fund also seeks to avoid investments in industrial activities, which do not fit with its environmental and social goals.

Examples of such negative activities include:

o manufacturing of armaments, alcoholic drinks or tobacco products;

o publication of pornographic material;

o generation of nuclear power; and

o operation of gambling facilities.

The Jupiter Ecology Fund will not invest in any company that derives over 10% of its turnover from any one of these activities. It may however, invest in a company which derives less than 10% of turnover from any one of these activities, but only if it makes an outstanding contribution to sustainable development in other respects. Additionally, the Jupiter Ecology Fund will not invest in any company that conducts or commissions animal tests carried out for cosmetic and toiletry purposes.

A company involved in animal testing on other products, and their ingredients, will only be suitable for investment if it has made a substantial commitment to minimise animal testing, and in other respects makes an outstanding contribution to sustainable development.

In order to respond to stock market opportunities, up to 5% of the Jupiter Ecology Fund’s assets may be invested in companies that appear suitable but for which research is still in progress. If the research has not been completed within three months of the investment date, the holding will be sold.

Further details of the Fund criteria can be found on www.jupiteram.com"

If you look at just more prominent headlines you'll see lots of talk about sustainability, then when you look further you find that it boycotts an important part of sustainable power generation. You might also dislike its boycott of alcoholic drink production unless you have a religious reason for wanting that, though if you do you should probably then look into lending-related activities because those may rule it out for you: "near cash" investments typically means lending on money markets to earn interest.

Good luck on finding something that matches your desires. You're very likely to fail unless you're willing to stop at the headline name, ignore greenwashing and accept boycotts of desirable things.

Nurse2047

https://www.vanguardinvestor.co.uk/investing-explained/ESG-funds

https://www.justetf.com/uk/find-etf.html Sustainable ETFs if filter equity strategy 

Scarum

mither_2 said:

Hi All,

With the increased focus on the environment (as there should be) I have been looking for funds that are investing in companies within this sector. 

The only fund that i have come across is Jupiter Ecology. Some of the companies within their top 10 holdings are familiar to me and should be well positioned in the future (wind turbine manufacturers, renewable energy developers etc) but I can't find any others to compare the fund against? 

Does anyone have experience in investing in such funds? Are there others that are worth checking out? 

Thanks! 

Well done in looking at ESG investment over a "profit at all cost" mentality.  Unfortunately so many people put investment gains above everything else without realising the consequence on the world.

While it may be very hard work (or impossible investing in funds) to achieve a 100% investment strategy that will avoid all undesirables you will at least avoid those things that contribute to hardship and devastation to many in the world.  By not investing in them you are not supporting them.

I started my SIPP last year and have only looked at ESG funds and Unit trusts and won't change the strategy.  I can only see it as a win win situation based on the future challenges this world faces.  It not only funds the pension but does so with a clear conscience knowing  it is doing a better thing for us all.  I have invested in the Jupiter Green unit trust (this is trading at a discount), also Impax Environmental Ord, Liontrust UK Ethical to name a few.  In terms of portfolio growth the last 6 months has seen a growth of about 8%.

Bobziz

jamesd said:

There are fund lists at say https://citywire.co.uk/funds-insider/sector/ecology-funds/i3744/?periodMonths=12&page=1 but the problem is that you've selected a fund that fails my ethical investment tests and maybe it doesn't meet your desires (30% invested elsewhere) either.

That's the problem: the details you need to determine whether a fund is what you want tend to be within hundred page fund prospectuses. Here's the headline objective:

"To provide capital growth with the prospect of income, over the long term (at least five years) by investing in companies whose core products and services address global sustainability challenges"

Yet here's a snippet from the 2021 annual report of this one, my bold:

"Jupiter Ecology Fund Screening and Criteria Summary

Introduction

The Jupiter Ecology Fund has a global growth remit and focuses on companies providing solutions to environmental and social problems. Companies must meet both our comprehensive financial assessment and environmental and social criteria and for the Jupiter Ecology Fund this includes looking at a full range of ethical exclusions.

Ethical and Environmental Screening

Ethical and environmental screening for the Jupiter Ecology Fund is undertaken by Jupiter’s sustainability analysts who specialise in the environmental and social performance of companies. Companies are invested against a set of ethical and environmental criteria summarised below. Additional research is provided by external research provider Sustainalytics.

Ethical and Environmental Criteria Summary

The Jupiter Ecology Fund invests in companies providing solutions to environmental and social problems, focusing on companies which respond to environmental challenges by developing a product or service which provides sustainable long term solutions.

The Jupiter Ecology Fund also seeks to avoid investments in industrial activities, which do not fit with its environmental and social goals.

Examples of such negative activities include:

o manufacturing of armaments, alcoholic drinks or tobacco products;

o publication of pornographic material;

o generation of nuclear power; and

o operation of gambling facilities.

The Jupiter Ecology Fund will not invest in any company that derives over 10% of its turnover from any one of these activities. It may however, invest in a company which derives less than 10% of turnover from any one of these activities, but only if it makes an outstanding contribution to sustainable development in other respects. Additionally, the Jupiter Ecology Fund will not invest in any company that conducts or commissions animal tests carried out for cosmetic and toiletry purposes.

A company involved in animal testing on other products, and their ingredients, will only be suitable for investment if it has made a substantial commitment to minimise animal testing, and in other respects makes an outstanding contribution to sustainable development.

In order to respond to stock market opportunities, up to 5% of the Jupiter Ecology Fund’s assets may be invested in companies that appear suitable but for which research is still in progress. If the research has not been completed within three months of the investment date, the holding will be sold.

Further details of the Fund criteria can be found on www.jupiteram.com"

If you look at just more prominent headlines you'll see lots of talk about sustainability, then when you look further you find that it boycotts an important part of sustainable power generation. You might also dislike its boycott of alcoholic drink production unless you have a religious reason for wanting that, though if you do you should probably then look into lending-related activities because those may rule it out for you: "near cash" investments typically means lending on money markets to earn interest.

Good luck on finding something that matches your desires. You're very likely to fail unless you're willing to stop at the headline name, ignore greenwashing and accept boycotts of desirable things.

This seems to be a common response where people are trying to do the right thing or at least a better thing. 

Beware total greenwashing but don't let perfect be the enemy of good.

spg1

I listened to a very interesting podcast from Baillie Gifford the other day which looked at ESG from a different angle which I hadn't considered before. There is an argument that investing in some ESG funds could actually hinder the transition to a more sustainable world. For example, there are equipment suppliers in the mining sector (which some ESG firms wouldn't touch) which are playing a vital role in helping the industry be more sustainable, and industries such as offshore wind also rely on mining for raw materials/metals.

Taking away investment capital from such firms -  and in the case of stock market quoted companies that could see their share prices fall and them taken over by private entities without any ESG interest - may not be the best approach. If the likes of Shell/BP were bought by a private equity firm would that be better for the environment than them being a highly visible public company under a lot of public pressure to be part of the solution?

The BG podcast series is called Short Briefings on Long Term Thinking and it's Episode 20: Exploring Sustainable Growth - A New Approach To ESG. The whole series is highly recommended (I don't have any connection to BG by the way, other than investing in a couple of their funds).

grumiofoundation

mither_2 said:

Hi All,

With the increased focus on the environment (as there should be) I have been looking for funds that are investing in companies within this sector. 

The only fund that i have come across is Jupiter Ecology. Some of the companies within their top 10 holdings are familiar to me and should be well positioned in the future (wind turbine manufacturers, renewable energy developers etc) but I can't find any others to compare the fund against? 

Does anyone have experience in investing in such funds? Are there others that are worth checking out? 

Thanks! 

Similar actively managed funds with a focus on sustainability/environment sector: 
Guiness sustainable energy
Vontobel Fund - Clean Technology
Nienty One global environment
Pictet clean energy
Pictet environmental opportunities (soft closed?)
Fidelty waste and water
FP WHEB sustainability
VT gravis clean energy
Sun Portfolio Fund Climate Assets 
BlackRock Global Funds -Sustainable Energy Fund
Nordea Global Climate & Environment

Investment trusts - JGC, IEM

Passive ETFs with same focus - although personally I would lean towards active management. 
INRG
RENW
BATG


If you are also looking at investing outside that sector can also look to invest ethically. 

You can invest in ESG filtered global trackers. Will track filtered version of index with various exclusions/different weightings.
Funds: (also various ETFs):
https://www.vanguardinvestor.co.uk/investments/vanguard-esg-developed-world-all-cap-equity-index-fund-uk-gbp-acc
https://www.vanguardinvestor.co.uk/investments/vanguard-esg-emerging-markets-all-cap-equity-index-fund-gbp-acc
https://fundcentres.lgim.com/uk/Private/fund-centre/Unit-Trust/Future-World-Equity-Factors-Index-Fund/

Also actively managed global funds:
Baillie Gifford positive change
Stewart Investors Worldwide Leaders Sustainability Fund.
BMO Sustainable Opportunities Global Equity Fund
Fundsmith sustainability equity
Montanaro better world  
Janus Henderson Global Sustainable Equity Fund 

And then if you are looking at specific markets e.g. UK smaller companies, emerging markets will be ESG funds/ETFs/investment trusts within that area.

In no way an exhaustive list and of course no recommendation for any of above funds (or comment on their ESG criteria). As with commenters above the ESG criteria are not static across all these funds. You will need to do your own research into whether the criteria of the fund manger/index is suitable for you. Cannot remember which fund it was but I was looking at an ethical UK fund which had Rio Tinto as one of its biggest holdings, for many people that probably wouldn't fit their ethical criteria.

mither_2

JohnWinder said:

Would you say you're seeking such a fund to meet the requirements of your values/beliefs, or is it sufficient reason that this flavour of investing may outperform a 'non-environment' option?

Such a fund would follow my values but I also believe it could perform as well as other funds. It doesn't need to be the highest performing and I would be more accepting of average/poor performance if there were as ESG benefit. 

Also, looking at the companies here (I ned to do much reading on each of them) they appear to be well positioned to be profitable in years to come.   

mither_2

grumiofoundation said:

mither_2 said:

Hi All,

With the increased focus on the environment (as there should be) I have been looking for funds that are investing in companies within this sector. 

The only fund that i have come across is Jupiter Ecology. Some of the companies within their top 10 holdings are familiar to me and should be well positioned in the future (wind turbine manufacturers, renewable energy developers etc) but I can't find any others to compare the fund against? 

Does anyone have experience in investing in such funds? Are there others that are worth checking out? 

Thanks! 

Similar actively managed funds with a focus on sustainability/environment sector: 
Guiness sustainable energy
Vontobel Fund - Clean Technology
Nienty One global environment
Pictet clean energy
Pictet environmental opportunities (soft closed?)
Fidelty waste and water
FP WHEB sustainability
VT gravis clean energy
Sun Portfolio Fund Climate Assets 
BlackRock Global Funds -Sustainable Energy Fund
Nordea Global Climate & Environment

Investment trusts - JGC, IEM

Passive ETFs with same focus - although personally I would lean towards active management. 
INRG
RENW
BATG


If you are also looking at investing outside that sector can also look to invest ethically. 

You can invest in ESG filtered global trackers. Will track filtered version of index with various exclusions/different weightings.
Funds: (also various ETFs):
https://www.vanguardinvestor.co.uk/investments/vanguard-esg-developed-world-all-cap-equity-index-fund-uk-gbp-acc
https://www.vanguardinvestor.co.uk/investments/vanguard-esg-emerging-markets-all-cap-equity-index-fund-gbp-acc
https://fundcentres.lgim.com/uk/Private/fund-centre/Unit-Trust/Future-World-Equity-Factors-Index-Fund/

Also actively managed global funds:
Baillie Gifford positive change
Stewart Investors Worldwide Leaders Sustainability Fund.
BMO Sustainable Opportunities Global Equity Fund
Fundsmith sustainability equity
Montanaro better world  
Janus Henderson Global Sustainable Equity Fund 

And then if you are looking at specific markets e.g. UK smaller companies, emerging markets will be ESG funds/ETFs/investment trusts within that area.

In no way an exhaustive list and of course no recommendation for any of above funds (or comment on their ESG criteria). As with commenters above the ESG criteria are not static across all these funds. You will need to do your own research into whether the criteria of the fund manger/index is suitable for you. Cannot remember which fund it was but I was looking at an ethical UK fund which had Rio Tinto as one of its biggest holdings, for many people that probably wouldn't fit their ethical criteria.

Thanks for the details. This is really helpful. 

I have some money in the Vanguard Developed World All cap Equity Index Fund but the biggest shareholdings in it are Apple, Microsoft, Amazon and facebook so probably not too far different from any other funds. Haven't been through the entire list but presumably there are some that would be in other funds but they have excluded for ESG reasons (fossil fuel companies etc)