20 years of sustainable investing and what this tells us about the future - Flipbook - Page 12
The state of our world – and looking
forward to the next 20 years
PETER MICHAELIS
This is where it gets more difficult, as the scorecard for progress on sustainable development
is complicated. On the one hand, poverty reduction and health outcomes have seen
welcome improvements; on the other, biodiversity, carbon emissions and inequality have
all deteriorated.
Measured in monetary terms, humanity has never created more
wealth – think of today’s trillion dollar companies that barely existed
in 2001. Yet much of this wealth creation has been achieved
at the expense of natural capital, as recently described in the
Dasgupta Review, and the proceeds have not been shared by
all. To quote from the Review, headed by economist Dr Partha
Dasgupta, ‘we rely on nature to provide us with food, water and
shelter; regulate our climate and disease; maintain nutrient cycles
2012
Liontrust Sustainable team
begins monitoring carbon
footprint of its funds to better understand
sources of portfolio emissions.
and oxygen production; and provide us with spiritual fulfilment and
opportunities for recreation and recuperation, which can enhance
our health and well-being. We also use the planet as a sink for our
waste products, such as carbon dioxide, plastics and other forms
of waste, including pollution.’
Dasgupta calls the imbalance between
our demands and nature’s supply
the ‘impact inequality’, calling
for a better balance between
what humanity takes from
nature and what we leave
behind for our descendants.
Our system still fails to price natural resources and ecosystem services
properly, nor do we manage the global commons effectively. Coupled
with this have been policies focused solely on supporting asset values to
the detriment of the poorer, non-asset holding sections of society. I am not
alone in being sceptical that the rapid adoption of sustainable investing
throughout the asset management industry has done much to change this
system. It appears to have been so easy for the largest companies to shift;
is this a case of ‘for things to remain the same, everything must change’?
For all the effort and activity in sustainable investing, the stark fact is
that, over the last 20 years, there are aspects of our world that have
clearly got worse. The parlous state of the natural world was summed
up in a podcast last year by Inger Anderson, head of UNEP (UN
Environment Programme), who gave a dismal report on the effect of
human impacts on land, sea and air: in each area, we have drastically
reduced the resilience and abundance of the natural ecosystems upon
which we rely. We are altering the chemistry of our atmosphere and
oceans in ways that will negatively impact future generations, and on
land we deplete our soil more rapidly than it can possibly replenish.
Societal inequality has increased and we can see the success of
our market-based economy has not fed through to all. Quantitative
easing and zero interest rates have rewarded asset owners but
those without have been steamrollered by the global financial
crisis, austerity, erosion of worker protection and Covid-19. We
know the system is not working when in a country as wealthy as the
UK, those essential nurses, carers and teachers so praised during
the pandemic cannot afford housing in the areas where they work
and particular ethnic groups are persistently disadvantaged.
For all our engagement on palm oil, it
has been to blame for 39% of forest loss
in Borneo since 2000.
For all our investment in renewables,
CO2 levels in the earth’s atmosphere
have risen from 360 to 415 parts per
million today, an 800,000-year high.
For all our engagement on plastics, there
are thought to be 5.25 trillion pieces
floating in the open ocean, weighing
up to 269,000 tonnes, and 100,000
marine mammals and turtles and a million
sea birds are killed by marine plastic
pollution annually.
12 - Liontrust: 20 Years of Sustainable Investing