Environmental investment is about long term returns and should not be dismissed
By Mark Hoskin , IFA at Holden & Partners
18 August 2011 | Thematic Blog | Comments (0)
At Holden & Partners we do not focus on this area because we take the moral high ground. We are not ethical missionaries - that was the old way, which went out with the 20th century. We are doing this because we see this as de-risking our investment process over the long term.
Investors are still going to companies like BP and Shell in a way that our grandfathers did - as long term growth and income prospects, but for me the age of the oil company as a stalwart behind a portfolio has gone, the recent BP catastrophe is just one manifestation of this. I am not saying that in the short term investments in these companies might not work. Indeed I have personally held BP for a short period for selfish reasons - but their long term business model faces serious challenges (See "Is there a carbon bubble and are your funds at risk"). In particular their constant pursuit of new reserves, which is arguably destroying share holder value. The world uses oil, but it does not like this fact and policy and corporate activity is focused on reducing our need for it.
Investors need to take stock and start thinking about the long term challenges the world faces in order to make sensible long term investment decisions. It is time for private investors to stop looking at the previous five year performance figures and invest in what did well yesterday. This serves only to maintain the status quo and ignore the changes the world is going through. It is time for advisers and private investors to step a little outside their comfort zones and take stock of what is happening in the world and consider on a risk /return basis where their money might be best disposed.
It is my belief that once UK investors start taking a more sustainable, forward looking approach to investing, environmental funds will sit comfortably within their portfolio holdings and their financial exposure to disasters like BP, which we are sure to see again, will be much reduced.
Tags: Environmental |
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Mark Hoskin is a Partner at Holden & Partners. Holden & Partners are Chartered Financial Planners who provide financial advice to high net worth clients, the majority of whom have a significant interest in ethical or environmental issues.
Mark Hoskin graduated with a History degree from Keble College, Oxford and went on to become a Chartered Accountant with Price Waterhouse. He cofounded Holden & Partners in 2003 and is a Certified Financial Planner and Chartered Financial Planner. Holden & Partners set up Worldwise Investor to help both advisers and investors understand quickly and easily how they can benefit from ethical and environmental investment in the UK market.
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