For Investment Professionals only Impact investing – helping to … · 2020-06-18 · facing,...
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Impact investing – helping to drive the circular economy The world is facing a rising tide of societal challenges, and recent campaigns, including the activities of Extinction Rebellion and the school strikes initiated by Greta Thunberg, have helped to highlight some of the extreme issues we are facing. With 20 of the past 22 years having been the hottest since records began, the world’s leading climate scientists warned last October that we only had a dozen years for global warming to be kept to a maximum of 1.5°C. Beyond this, said the UN Intergovernmental Panel on Climate Change, even half a degree would significantly worsen the risks of drought, floods, extreme heat and poverty for hundreds of millions of people. While climate change is arguably the largest issue humanity is facing, there are many other challenges, both environmental and social, with which the world is having to contend. One area of increasing concern is waste. Currently the world generates some two billion tonnes of waste annually, and by 2050 it is estimated that if we carry on as we are, there could be more plastic in the oceans, by weight, than fish. The ‘take, make and dispose’ linear economic model which has led to the generation of so much waste has dominated since the advent of the industrial era, but this is no longer sustainable. Not only are many resources finite, or increasingly difficult to obtain, but their extraction and single-use has costly implications for the environment and society. An alternative is moving to a more ‘circular economy’, where, for example, waste from production and consumption becomes a resource to be recycled and reused. As well as reducing unnecessary waste and mitigating the risks of resource scarcity, making the transition to closed-loop processes can provide both environmental and economic benefits. As a case-in-point, a meta-study, published this year in the Journal of Industrial Ecology, highlighted estimates that by 2030, a shift toward a circular economy could reduce net resource spending in the European Union by €600 billion annually, improve resource productivity by up to 3% annually, and generate an annual net benefit of €1.8 trillion. It also pointed out that by shifting to various circular practices, which could include nutrient recovery in agriculture or materials substitution in construction, some 7.5 billion tonnes of carbon dioxide equivalent could be reduced globally – this equates to half of the existing emissions gap to reach the 1.5°C target as outlined under the Paris Agreement. The importance of this shift is reflected in the UN Sustainable Development Goals (SDGs). Goal 12 is to ensure sustainable consumption and production patterns. To do this it will take more than just a change in mindset; it will also require new processes and systems, and this means additional investment. Increasingly, impact investors – a growing number of whom invest in listed equities – are helping to direct this investment capital in the right direction. These investments target a wide range of impact areas, which are increasingly being mapped to the SDGs, which provide a framework against which impact can be assessed and measured. The M&G Positive Impact Fund Given the scale of the issues the world is facing today, we need to act now to help protect the future of the planet and our place in it. The M&G Positive Impact Fund provides opportunities for those who want to help address the world’s most pressing challenges, while also achieving financial returns. The fund embraces the SDG framework and invests in companies focused on six key social and environmental areas. One such area is the circular economy, investing in companies like Brambles, which we think is one of the world’s most sustainable logistics businesses, and DS Smith, a global packaging leader in recycling. Please note that the value of the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise, and you may get back less than you originally invested. The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment. The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash. For more information please visit: www.mandg.co.uk/positiveimpact For Investment Professionals only MAY 19 / 365303
Transcript of For Investment Professionals only Impact investing – helping to … · 2020-06-18 · facing,...
Impact investing – helping to drive the circular economyThe world is facing a rising tide of societal challenges, and recent campaigns, including the activities of Extinction Rebellion and the school strikes initiated by Greta Thunberg, have helped to highlight some of the extreme issues we are facing. With 20 of the past 22 years having been the hottest since records began, the world’s leading climate scientists warned last October that we only had a dozen years for global warming to be kept to a maximum of 1.5°C. Beyond this, said the UN Intergovernmental Panel on Climate Change, even half a degree would significantly worsen the risks of drought, floods, extreme heat and poverty for hundreds of millions of people.
While climate change is arguably the largest issue humanity is facing, there are many other challenges, both environmental and social, with which the world is having to contend. One area of increasing concern is waste. Currently the world generates some two billion tonnes of waste annually, and by 2050 it is estimated that if we carry on as we are, there could be more plastic in the oceans, by weight, than fish.
The ‘take, make and dispose’ linear economic model which has led to the generation of so much waste has dominated since the advent of the industrial era, but this is no longer sustainable. Not only are many resources finite, or increasingly difficult to obtain, but their extraction and single-use has costly implications for the environment and society.
An alternative is moving to a more ‘circular economy’, where, for example, waste from production and consumption becomes a resource to be recycled and reused. As well as reducing unnecessary waste and mitigating the risks of resource scarcity, making the transition to closed-loop processes can provide both environmental and economic benefits.
As a case-in-point, a meta-study, published this year in the Journal of Industrial Ecology, highlighted estimates that by 2030, a shift toward a circular economy could reduce net resource spending in the European Union by €600 billion annually, improve resource productivity by up to 3% annually, and generate an annual net benefit of €1.8 trillion.
It also pointed out that by shifting to various circular practices, which could include nutrient recovery in agriculture or materials substitution in construction, some 7.5 billion tonnes of carbon dioxide equivalent could be reduced globally – this equates to half of the existing emissions gap to reach the 1.5°C target as outlined under the Paris Agreement.
The importance of this shift is reflected in the UN Sustainable Development Goals (SDGs). Goal 12 is to ensure sustainable consumption and production patterns. To do this it will take more than just a change in mindset; it will also require new processes and systems, and this means additional investment.
Increasingly, impact investors – a growing number of whom invest in listed equities – are helping to direct this investment capital in the right direction. These investments target a wide range of impact areas, which are increasingly being mapped to the SDGs, which provide a framework against which impact can be assessed and measured.
The M&G Positive Impact FundGiven the scale of the issues the world is facing today, we need to act now to help protect the future of the planet and our place in it. The M&G Positive Impact Fund provides opportunities for those who want to help address the world’s most pressing challenges, while also achieving financial returns. The fund embraces the SDG framework and invests in companies focused on six key social and environmental areas. One such area is the circular economy, investing in companies like Brambles, which we think is one of the world’s most sustainable logistics businesses, and DS Smith, a global packaging leader in recycling.
Please note that the value of the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise, and you may get back less than you originally invested.
The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.
For more information please visit:www.mandg.co.uk/positiveimpact
For Investment Professionals only
MAY 19 / 365303
