Increasingly aware of damage done to the environment, sustainable investing is more popular than ever.
On World Environment Day, the London market debut of a new renewables technologies fund has offered more evidence of the positive momentum behind sustainable investing and the impact it is having on influencing industry and consumer behaviour.
Representatives of Aquila European Renewables Income Fund were present for the opening bell at the London Stock Exchange this morning, having just raised €154.3 million (£136.9 million) for investment in a diversified portfolio of hydropower, onshore wind and solar assets in continental Europe and Ireland.
Aquila joins the likes of Impax Asset Management Group (LSE:IPX), John Laing Environmental Assets (LSE:JLEN) and Renewables Infrastructure Group (LSE:TRIG) as London-listed options for investors looking for sustainable value. Interim results from Impax today highlighted current trends after £887 million of inflows in the six months to March 31, with assets under management growing by 6% to £13.3 billion.
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With investment mandates being driven by environmental, social and governance (ESG) criteria, UBS has this week taken a closer look at how investors can generate a positive impact for the health of oceans. The broker's analysis has implications across a range of sectors, including waste management, transportation, and food production.
Coastal and marine resources contribute an estimated $28 trillion to the global economy each year, but this has left them vulnerable to environmental degradation, acidification, overfishing, climate change and pollution.
UBS points out that about 8 million tonnes of plastic waste ends up in the ocean every year, the equivalent to dumping an entire refuse truck of plastic into the ocean every minute. It warns there could be more plastic than fish in the sea by 2050.
About 90% of manufactured plastics are derived from fossil fuels, the production and consumption of which exacerbates rising sea levels and ocean acidification.
While investments that are directly linked to ocean health are relatively niche, UBS says there are ways to target investments that can improve oceans whether directly or indirectly. Frameworks exist around measurement, such as through the Global Impact Investing Network.
UBS said engagement with public companies exposed to the marine sector, or with particularly heavy packaging footprints, could also qualify as "true impact investing" as long as they meet certain criteria.
The broker added:
"Traditional investment in public companies that are thematically aligned with positive outcomes for the ocean can still drive positive change, though investing in them would not be considered impact investing."
The war on plastics is a key focus for Impax, whose investment objectives aim to benefit from growth in the markets for cleaner or more efficient delivery of energy, water and waste.
Impax has been investing in the transition to a more sustainable global economy for more than two decades, with rising interest from a wide range of asset owners around the world.
Chief executive Ian Simm said: "Although historically regulations have typically shaped demand in environmental markets, consumer interest is now an important contributor.
"For example, as the 'war on plastics' continues to gather pace, companies in the areas of recycling, reverse vending and alternative packaging are reporting strong prospects."
In the food sector, consumers in developed countries are moving away from established brands and favouring natural foods and lower levels of meat consumption.
And in the transport sector, Simm noted a new wave of investment in electric vehicle (EV) manufacturing and its supporting infrastructure, such as London's plan to invest £24 million to help black cab drivers switch to EVs.
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