Mike Fox considers how sustainable investing has proved advantageous over the long term.
Sustainable investing may have gone mainstream, but for the vast majority of the 17 years that I’ve been managing sustainable funds, it has been on the margins of fund management. Indeed, when I started in the industry in 1999, I was told that environmental, social and governance factors had no role in investing and weren’t relevant to financial analysis. This view was so ingrained that nobody even thought to question it.
In a way, market participants were right to be sceptical: financial markets were about to experience the commodity supercycle that made it difficult not to invest in the global extractive industries leaders in the FTSE 100. Likewise, oil stocks performed strongly as the price of Brent crude rose steadily from below $18 in 1999 to over $111 in 2012. Meanwhile, tobacco stocks defied gravity for years, despite the obvious harm tobacco does to its consumers, driven by emerging markets sales and merger-related cost savings.