Episode 11 Part 2: Fiduciary duty and the limitations of GFANZ
In part two of our latest Climate Change podcast episode, Tom Gosling, Executive Fellow, London Business School and John Teahan, CFA continue the conversation by discussing Tom’s two blogs on the Glasgow Financial Alliance for Net Zero (GFANZ) and the clash that developed over commitments made under that umbrella body.
Tom explains that the overarching commitments made by GFANZ to limit global warming to 1.5C, which scientists claim is almost impossible. This creates limitations for asset managers who must now quickly energise the transition at the portfolio level to support climate solutions and policy. He discusses whether 1.5C is an optimal target for investors, whether portfolio decarbonisation has a tangible real-world impact, and the implications of these targets on future market trends. Does this mean that asset managers are being forced to hit unreasonable targets? And are we inhibiting government action by doing so? Explore the conversation by listening today.
Episode 11 Part 1: Fiduciary duty and the role of lobbying in climate change
In part one of our latest Climate Change podcast episode, Tom Gosling, Executive Fellow, London Business School and John Teahan, CFA discuss Tom’s work assessing evidence underpinning sustainability research. They consider non-financial issues, within the context of our fiduciary duty, as stewards of our client’s capital.
Tom has researched and written extensively on subjects such as pay, corporate governance, sustainable investing, stakeholder capitalism, and climate. His curiosity in these issues grew from a personal commitment to reduce his own carbon footprint by 50% by 2025. In this podcast, Tom explores how the corporate governance system and the interaction between investors and companies either support or inhibit the wider societal changes we need to make. Discover whether there is pressure to only focus on the positives of ESG, and consider examples of impact from companies like Sainsbury’s. Listen to Tom’s story and his findings to learn more about these issues.
Episode 10: Net zero asset management commitments and TCFD reporting progress
In a new episode of our Climate Change podcast, Vishal Hindocha, CFA, Global Head of Sustainability Strategy, MFS and John Teahan, CFA give us an insight to their conversations over coffee about climate, and the role of the investor in Net Zero.
Vish highlights the importance of education and knowledge sharing with clients, especially in a time where best practice is yet to emerge, and the climate science is constantly evolving. During their discussion Vish talks about his involvement with NZAM (Net Zero Asset Management), a collaboration between asset managers who agree there is not one way forward but however they are committed to sharing insights that are not prescriptive but and galvanise change. He discusses the challenges companies face with meeting climate targets whilst manging risk and returns and dealing with markets where climate-related issues become political.
Episode 9: Creating deliverable climate action goals in investing
In a new episode of our Climate Change podcast, Mike Hugman, Director of Climate Finance at the Children’s Investment Fund Foundation speaks about his experiences as one of the leading investors in climate action and sustainable projects.
Mike discusses his new role at CIFF and his thoughts on climate investing, from why investors should back companies who are all-in on sustainable strategies, onto how you can level the regulatory playing field by working in tandem with industry.
Episode 8 Part 2: SDR proposed product labelling and the UK government’s net-zero ambition
John Teahan, CFA Portfolio Manager at Redwheel (formerly known as RWC partners) continues the conversation with Sacha Sadan, newly created Director of ESG at the Financial Conduct Authority (FCA).
Here they focused on labelling, particularly on the transition and impact labels. Together they spoke about UK government’s net-zero ambition and what that means, alongside universal owners growing focus on system issues and the increasing calls for devolving shareholders voting rights.
Episode 8 Part 1: Challenges to ESG and how international standards may reduce confusion
In the eighth episode of our Climate Change podcast, John Teahan, CFA Portfolio Manager at Redwheel (formerly known as RWC partners) talks with Sacha Sadan, newly created Director of ESG at the Financial Conduct Authority (FCA).
Together they discuss challenges to ESG, from some recent high-profile criticism, to expanding multiples of proper ESG stocks and sectors, onto the creation of the international sustainability standards board and how that might help reduce the confusion around ESG ratings.
Episode 7: Climate change through the eyes of an impact investor
In the seventh episode of our Climate Change podcast, we talk impact investing with Maria (Largey) Smith, Head of the Financial Institutions sector team at CDC Group. John Teehan, CFA Portfolio Manager at Redwheel (formerly known as RWC partners) delves into world of development investment solutions with Maria.
Climate change through the eyes of an impact investor
Head of the Financial Institutions sector team at the CDC Group, Maria (Largey) Smith, is interviewed by John Teehan, CFA Portfolio Manager at Redwheel (formerly known as RWC partners) in this new podcast. Climate change through the eyes of an impact investor delves into how the world’s first leading impact investor, CDC Group is tackling one of the biggest global development challenges.
CDC Group holds over 70 years’ experience as a development financial institution wholly owned by the UK Government. They invest in flexible capital to support private sector growth and innovation in developing countries. Maria is responsible for the equity FI portfolio across Africa and South Asia and in this podcast, she shares how CDC Group is helping meet countries financing needs for improving infrastructure and enterprise.
John probes Maria on the CDC Groups capital structure, and measurements that impact investors can have on climate change. Maria discusses how the CDC is focused on business growth to help lift businesses out of poverty with the aim to generate returns that will continue making an impact. With a portfolio of over £7 billion, the institution is operating in 5-year strategy period agreed by shareholders, with the target of creating a significant step-change approach to tackle climate change.
Maria reveals plans to embark on the new 2022-26 strategy “we’re aiming to invest one and a half to two billion per annum, over the investment period…this new strategy builds on the mandate and track record over the previous period but, enables to go a little bit further and a little bit deeper in particular in two areas: one is increased focus in climate finance which we will talk a little bit about today, including green infrastructure and the second is new investments in digital infrastructure.”
Learn how impact investors operate today and their proposed solutions to reduce the impact of climate change tomorrow.
Record date: December 2021
Episode 6: Developing a high-level framework to responsible investing
In this sixth episode of the Climate Change podcast series, John Teahan, Portfolio Manager at RWC partners talks to Sonja Laud, Chief Investment Officer at Legal and General Investment Management. In this episode, they discuss LGIM's leading work on climate issues, engagement, and resolutions.
Developing a high-level framework to responsible investing
Influence Map ranked Legal and General Investment Management (LGIM) at the top of global asset managers for climate engagement and climate resolution votes, with a score 99% and a performance band of A+. In fact, these scores date back to 1980 and have always been a part of LGIM’s approach to minimum standards in responsible investing.
John Teahan, Portfolio Manager at RWC Partners interviews Sonja Laud, Chief Investment Officer at LGIM on LGIM’s leading work on climate issues. Said to have recorded an AuM of £1.6tn in 2020, LGIM has made it clear every engagement and every vote really matters.
As the former Head of Equity at Fidelity International, Sonja Laud and John Teahan worked together on portfolios and discuss how LGIM has made climate an important part of responsible investing, from embedding it into the firm’s culture, to acting on behalf of clients.
The conversation focuses on the companies’ powerful strategies to influence and how LGIM' Stewardship and Investment teams operate. In practicing ESG Sonja share’s how it provides a positively holistic view of a company. By moving away from just looking at the P&L, balance sheet, and doing fundamental analysis as it’s always been done, ESG integration can add a broader perspective.
Sonja says, ‘We’re doing this because, point one we feel we have a responsibility to address big societal issues. Point two, and maybe more importantly we believe that these issues do carry financial materiality, and that means you have to include them in your investment process in order to deliver attractive and relevant investment propositions to your clients.’
Listen to this podcast to hear from Sonja Laud on their leading the LGIM ESG strategies and high-level framework to responsible investing.
Record date:15 October 2021
Episode 5: The shift to renewable energy and investor opportunities
In this fifth episode of the Climate Change podcast series, John Teahan, Portfolio Manager from RWC Partners, talks with Sean Maguire, Managing Director at Impax Asset Management about renewable energy in Europe and the opportunities for investors.
The shift to renewable energy and investor opportunities
Renewable energy presents massive opportunity for investors, with the IEA estimating that on average there was £2 trillion spent annually over the last 5 years on investing in energy, rising to £5 trillion by 2030.
Renewables are expected to take a leading role in replacing fossil fuels, providing two thirds of energy by 2050 according to the IEA new zero by 2050 scenario. To put this into context, renewables, including hydro, account for 11% of energy needs today. This energy transition poses a massive global challenge that will impact all parts of the economy, and for investors into the energy markets, this will influence returns significantly.
Listen to this podcast with Sean Maguire, who has worked in the renewable energy sector for 15 years and has a unique insight into the development of the industry and a key understanding of the challenges it faces including technical, regulatory and investor return pressures.
Record date: 22 July 2021
Episode 4: The fundamentals of climate science
In this fourth episode of the new Climate Change podcast series, Thomas Streater, CFA from the CFA UK Climate Change content working group, talks with Dr. Sasha Turchyn, Geochemist at Cambridge University about the basics of climate science and the drivers behind climate change/greenhouse effects.
The fundamentals of climate science
As an investment professional it’s important to gain an understanding of what is meant when talking about climate change and the benefits of shifting existing behaviours. In this podcast explores the basics to take a high-level view of the climate science and what it means for the industry as a whole.
Climate models, whilst varied, are all pointing in the same direction… a global climate that is more volatile and unpredictable that will negatively influence the human race. The Paris Agreement sets out the foundations to tackle this, with many individuals, companies and governments asking how they can achieve net-zero by 2050 or sooner.
What can you do?
Record date: 26 February 2021
Episode 3: The green economy - Sizing the investment opportunity
In this third episode of the new Climate Change podcast series, Thomas Streater, CFA from the CFA UK Climate Change Content Working Group, talks with Lee Clements, Head of Sustainable Investment Solutions at FTSE Russell about the green economy and sustainable investing.
Whilst there is a lot of focus on mobilising climate finance in the direction of the green economy, a shortage of concrete data and definitions are causing a lack of awareness around the investment opportunities available. For years, green was loosely defined, based on concepts rather than a specific industrial system. This is where Lee Clements and FTSE Russell step in.
Through the Green Revenues 2.0 data model, they have identified more than 3000 global companies that are participating in the green economy, equating to an estimate of $4 trillion worth of market cap or 5-6 percent of all listed global equities. FTSE Russell have developed a structure, measurement methodology and process to help truthfully size the growing green economy.
Client interest has significantly grown, with investors starting to look beyond excluding risk areas such as coal mining or gas, and shifting their attention to growth opportunity areas, for instance renewable energy or electric vehicles. This interest has been further stimulated by regulations similar to the EU Taxonomy.
Record date: 23 February 2021
Episode 2: Reducing food waste on an industrial scale
In this second episode of the new Climate Change podcast series, Mark Curtin, CEO at the Felix Project speaks with John Teahan, Value Investments Portfolio Manager at RWC Partners about reducing food waste through the distribution of surplus food and how the investment industry can support this work and improve the current landscape.
Right now, millions of people in the UK regularly experience hunger. Yet tonnes of surplus fresh food is thrown away every day. Mark Curtin and his team at the Felix Project have set out to change this.
The UN Sustainability Development Goals (SDGs) are looking to halve food waste by 2030, with the UK making significant progress. There is a growing awareness, from all types of investors, about the issue of food waste and the business benefits that can be realised when providing solutions to tackle it.
Targeting investments in sustainable food companies and in businesses that can demonstrate innovation in resource efficiency and nutrition. Especially those who invest in technology that assist in reducing waste in their production, monitoring, packaging, storage, harvesting and distribution channels.
In simple terms, waste negatively impacts margins in any business, and reducing this waste will improve profitability and investor returns. What can those working in investment do to support this?
- Inform your clients about the benefits of reducing food waste within their business (increased profits margins/improved brand image/reduced carbon footprint)
- Align with your stakeholders who already want to tackle food waste, hunger and poverty
- Research existing investment products that target food waste and other sustainability issues, for instance the World Bank’s Sustainable Development Bonds
- Create new investment opportunities and innovative solutions to meet the demand
- Promote the work of food waste charities similar to the Felix Project
- Make a personal change within your business and take a moral stance
Record date: 23 March 2021
Episode 1: How Are Value Investors Adopting ESG Principles?
In this first episode of the new Climate Change podcast series, Thomas Streater, CFA from the CFA UK Climate Change Content Working Group, speaks with John Teahan, Value Investments Portfolio Manager at RWC Partners about climate change and value investing.
A recent Professional Investor article, Asset managers still slow on climate change, revealed that a substantial number of asset managers are still struggling to engage with climate change challenges and research conducted by the CFA Institute shows that, of 305 respondents from across the investment industry, only 40% are currently incorporating climate change into the investment process, even though three-quarters of respondents feel that climate change is an important issue for investment management.
2020 - the boom year for ESG
This last year has seen phenomenal growth with ESG investing and there has been a renewed focus on these high-performing strategies. Bernstein estimates that £200bn flowed into ESG strategies in 2020, compared to £100bn being pulled from all active funds. Why was 2020 such a pivotal year for ESG investing?
A combination of factors has contributed to these successes, from the doubling of companies declaring net zero targets, increased regulation (EU Taxonomy, SFDR) and a societal recognition and shift towards environmental issues. On top of this COVID-19 gave ESG an unexpected boost with the UK governments mantra of ‘Building Back Better’ cutting through with the general public and investors alike.
There has been a real wake up call for value investors to engage with ESG issues, to attract and win capital for their businesses and the companies they invest in. For Teahan and his organisation RWC Partners, it is not only about integrating ESG strategies into their portfolios, but it’s about going even further and becoming impact investors.
Record date: 9 April 2021