Many investors were shocked last week when HSBC’s now-suspended head of responsible investing quipped, ‘who cares if Miami is six metres underwater in 100 years?’ Katie Binns looks at the investing options that can increase the chance people will still be singing Will Smith’s hip-hop hit Miami in 100 years.
Stuart Kirk, the now-suspended global head of responsible investing at HSBC, made the headlines last week for all the wrong reasons, after giving a speech at the Financial Times’ Moral Money conference.
While making a speech titled “Why investors need not worry about climate risk”, he referred to climate crisis warnings as “unsubstantiated” and “shrill” and complained about having to spend time “looking at something that’s going to happen in 20 or 30 years”. He even asked: “Who cares if Miami is six metres under water in 100 years? Amsterdam has been six metres under water for ages and that is a really nice place.”
Hard words to hear, even for pragmatic investors who know it takes time to turn around the juggernaut of global finance for the good of the planet.
“HSBC’s head of responsible investment may have hit the wrong notes, to put it mildly, with those counting on banks and asset managers to support the world’s crucial energy transition,” says Rebecca O’Connor, head of pensions and savings at interactive investor. “His speech does not represent the views and feelings of the majority of fund managers working in sustainable investment.
“For example, most believe it is worth pursuing strategies that support both climate change mitigation, ie, working to prevent further increases in warming, as well as adaptation, which is investing in activities that help humanity cope with rising temperatures,” she explains.
So do take heart, there are plenty of genuinely sustainable investment options out there.
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Positive impact funds
If you want to avoid accidentally putting your ISA or pension money into an investment house with conflicted views on environmental, social, and governance (ESG) issues, then positive impact funds may be for you. These will be focused on specific climate solutions. WHEB Sustainability, Impax Environmental Markets (LSE:IEM) and Liontrust Sustainable Futures are good examples of solutions-focused funds.
“With this focus, you can be confident the managers are committed to making returns positively, from the transition, rather than profiting from fossil fuels along the way,” explains O’Connor.
There’s also interactive investor’s ACE 40 fund list to consider, a selection of 40 best-in-class sustainable investing options from a list of more than 140 funds, trusts and exchange-traded funds.
Your self-invested personal pension
A self-invested personal pension (SIPP) allows the same wide choice of investments that are available with stocks and shares ISAs. And it’s possible to bring together several old workplace pensions to a SIPP by transferring separate schemes and consolidate your pension.
You could save a huge amount on fees over time as a £100,000 pot with 1% fees would rack up charges of £1,000 per year and more than £22,000 over 20 years. In contrast using ii’s flat fee platform could cost as little £2,400 over 20 years for a £100,000 fund.
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Your workplace pension
You may have less choice when it comes to your workplace pension. But most pension funds are now committed to net zero, to a greater or lesser extent, and many also offer sustainable alternatives to the default funds that they provide to most pension savers.
It should be possible to switch to the sustainable fund option, if there is one, by simply logging into your pension account online or via your provider’s app, if they offer one.
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Other aspects of personal finance
Don’t despair if you can’t move your pension, or don’t have any investments. There is still the option of moving your bank account, savings account or business bank account to a sustainable provider – or at least one that does less harm than the big high street banks, which continue to invest in many fossil fuels companies.
Banks such as the Co-operative, Triodos and Nationwide offer more climate-friendly current accounts. Meanwhile, if you own a small or medium-sized business you could take a look at United Trust Bank, Starling and Tide. For savings, possible options are the Ecology Building Society, the Charity Bank and Gatehouse Bank.
Here’s to people belting out “Welcome to Miami...” in 2122.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
Important information – SIPPs are aimed at people happy to make their own investment decisions. Investment value can go up or down and you could get back less than you invest. You can normally only access the money from age 55 (57 from 2028). We recommend seeking advice from a suitably qualified financial adviser before making any decisions. Pension and tax rules depend on your circumstances and may change in future.