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Ethical investors are being urged to “stay strong” after an exceptionally tough year in which sustainable funds copped a double whammy from being underexposed to soaring energy stocks and overweight in battered technology stocks.
“If you’re already invested, stay strong because you only crystallise losses when you sell and long-term investing in energy stocks is not going to be the place to play,” Australian Ethical chief customer officer Maria Loyez says.
Energy and fossil fuels have been the standout sector in 2022, fuelled by the Ukraine-Russia conflict and widespread energy security issues. These stocks are usually excluded from ethical investment funds.
At the same time, the technology sector, which does well on environmental, sustainable and governance (ESG) metrics, has undergone a price correction.
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Rather than going the DIY route, Loyez believes that ethical investors would be better off interrogating fund managers about what companies are included and excluded from their ESG products, their investment philosophy, the detail of profit impact reporting, and scrutinising where and how fund managers have voted in their engagement and advocacy activities.
“Some are talking about ESG but voting against climate changes actions at annual general meetings,” Loyez says.
She points out that ethical investors have two equally important roles: creating impact by giving or withdrawing money from a company and engaging in advocacy to encourage companies to act more ethically.
This is an extract from an article written by Agnes King for the Australian Financial Review, published on 6 December 2022.
Read the full story: Ethical investing becomes a test of long-term conviction - Australian Financial Review
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