How can we best invest for a sustainable future?

Freetrade Chat šŸ”„
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Itā€™s not enough just to make money. We have to do good at the same time.

I wonā€™t ask you if you think being ethical is important. Iā€™ll just hope that you will agree that doing good is better than doing bad and sometimes when we do bad we do it because we donā€™t know any better.

Iā€™m new here and I apologise if this sounds preachy. Itā€™s not my normal topic of conversation.

Although in my 40ā€™s I never thought there was such a thing as ethically sound stocks and shares. But I recently found out there is such a thing as socially responsible investing. And the more we highlight the investments that are working to make the world a better place, the more we highlight those that arenā€™t.

Iā€™m not saying we should name and shame.

If we flagged all the companies involved in gambling, tobacco, intensive farming, cause environmental damage, animal testing, genetic engineering and weapons Iā€™d be happy. But I doubt there would be much business left.

It would be easier to start highlighting companies with decent behaviour and ethics. Those that promote equal opportunities. Those that donate to charities or develop pollution control and environmental technology.

Yes doing this is going to make some people uncomfortable. But not as many as those that will be affected by the continued collapse of our social and environmental structures. Itā€™s already happening, as we prop up the companies that donā€™t care for anything but growth at any cost.

I know there is a fundamental flaw in my argument here. How can a company love people more than money when it is beholden to the shareholders?

Well what if those shareholders were interested in a liveable ecosystem for the future?

Freetrade is in the perfect position to champion this. Its great design and user experience might offer an ethical ranking. Highlighting companies driving positive change or rewarding socially responsible investing would give it a unique appeal. The green fuels section is certainly a start.

The ethical bank Triodos are leading the way with savings. Imagine what kind of trading app they might put out in the future.

There are so many great opportunities in this space. As i said, Iā€™m new here. Still to explore prolly but Iā€™m enjoying the Freetrade app. If I am missing something please let me know. Obviously Iā€™m hoping to hang around long term and make some money. But only so I can spend it on and in a sustainable future.

Yesterday a friend and mentor celebrated his 76th birthday. He told me he had no idea how much longer he has on this planet. And that he never thought that heā€™d be leaving it in worst shape than when he arrived.

This will be an uncomfortable truth for all of us.

For all that we build, for all our technological advancements, we have decimated biodiversity and a chain reaction has begun.

But giving up is not an option. Neither is mindless hedonism. Real change can happen and it starts with a clear choice. Do good, or do bad. Invest in the continued decimation of our ecosystem or a sustainable future.

Itā€™s time to champion companies making the world a better place. And when those companies shine, perhaps others will follow.

I hope FreeTrade feel the same way.

So where do we start?

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Great topic. There have been a bunch of discussions on this already, e.g. How important is Ethical Investing?
If you want to read some view points. ESG ratings arenā€™t perfect but are given for most ETFs and could be incorporated into Freetrade for example. Freetrade should not rank companies themselves though, thatā€™s too much of taking a side and bad policy.
P.S. as a scientist, I was triggered by the inclusion of genetic engineering as ā€˜badā€™. This also highlights the subjectivity of labels like ā€˜goodā€™ and ā€˜badā€™.

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Great post and incredibly important.

I think a big challenge for individual investors concerned about this (which as you say - everyone should be) is trust. How do we know and trust that a company is sustainable and / or ethical? In a world where anyone can get away with saying anything.

Thereā€™s a great new documentary available on BBC called ā€˜Extinction: The Factsā€™ which is short and sweet, for those uneducated on the severity of climate change. Although it does lack the initiative of what exactly we as individuals - can do, to make a difference.

I have an open ear, and would love to learn more about sustainable investments.

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Thanks Seb, and yes. Please excuse my sweeping generalisations. I did not add ā€˜big pharmaā€™ for the same reason i should probably not have thrown genetic engineering in there. I am fascinated to see where CRISPRā€“Cas9 will go. In the right hands of course.

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Thanks Brendon. Iā€™m hoping that any company making wild and improper claims will be outed. thatā€™s if there will be any oversight or investigative journalism left.

I will put ā€˜Extinctionā€™ on the top of my to-watch list and candidly add that I was lucky enough to have dinner with David Attenborough once (not on my own). We all owe him a great debt of gratitude for his work. He is also a really nice guy. Perhaps I should ask him where he invests. :slight_smile:

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David is wonderful, what a pleasure it would be to have dinner with him.

My one wish is for our leaders to connect the wellbeing of our planet, to our economy. We canā€™t have the later, without the former.

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Just saw that Plus customers have a ā€œHigh ESG scoreā€ category on the discover tab now.

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That seems like a missed opportunity for FreeTrade. Making an ethical choice should be available to everybody regardless. In my honest opinion.

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There are already a few ā€˜Socially Responsibleā€™ ETFs. The problem is most of the businesses which fit your needs are private start ups rather than established equity plays.

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The green energy companies are an obvious starting point.
They were my first investments on FreeTrade

The Renewables Infrastructure Group TRIG
Bluefield Solar Income Fund BSIF
Foresight Solar Fund FSFL
Greencoat Wind UKW
Pennon Group PNN
Jlen Environmental Assets JLEN
Nextenergy Solar Fund
Brookfield Renewable Partners BEP
Brookfield Renewable Corporation BEPC
Atlantica Sustainable Infrastructure AY

They have nearly all been flat over the last year. They all dropped in March with the market and have mostly recovered.

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Great post @Documentally, thanks for sharing.

Itā€™s something I also feel personally strongly about, so a lot of what you said really resonated.

From a Freetrade point of view, we know that investments in green companies have been getting more and more popular over the last year or so:

In terms of the product, our goal is to continue to make it easier for people to find companies they may feel aligned with.

As you mentioned, we did launch a Green energy collection on the app a few weeks ago, which is available to everyone.

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ESG is also another way which can give an indication of a companies environmental credentials.

And although we do have a collection for early Plus members on the app now, we will take on board the feedback on this and consider more ways of making this type of information available to everyone, whether thatā€™s through content, on the app, etc.

Letā€™s keep the discussion going, and weā€™d love to hear what other people would find useful in this area.

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Thanks for this. Great list!

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You also have the Hydrogen power sector. Helping to transition away from fossil fuels. They tie in nicely with the renewable energy sector as surplus energy can be used to split water into hydrogen. This hydrogen can then be used as a clean energy.

Notable companies here are:
ITM Power ITM
Ceres Power CWR
Plug Power PLUG

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Electric Car manufacturers?
A lot of energy and the earths resources are used in manufacturing an electric car and the batteries. But on balance when you consider the alternative ICE cars, they should probably make the list

Tesla TSLA
Nio NIO
Li Auto LI
Xpeng XPEV

Nikola NKLA (havenā€™t actually produced anything yet, except smoke and mirrors!)

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I think the Nikola team are on their way - theyā€™ve got the journeys down a hill sorted. Just need to do the flat bits and uphill bits.

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Itā€™s a good point, in terms of resources required fo produce electric cars.

Similarly, there are lots of energy companies making significant investments into green energy, while trying to shift their business away from fossil fuels ā€” may need a separate list for them?

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Of the big fossil fuel giants, Shell and BP have recognised the need to pivot their business model away from fossil fuels. Will they manage it? Iā€™m not sure, but I have invested in them in the hope that they do.

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Isnā€™t that just PR? Like are renewables actually a relevant part of the business, I canā€™t find solid stats but I imagine the fraction of their earnings from renewables is infinitesimal.

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PR doesnā€™t generate revenue if you have no product. Renewables are a part of both BP and Shell and look to continue to grow in that area, itā€™s only sensible. Oil and other resources though arenā€™t going anywhere.

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Right but I just mean they want to be seen to doing the right thing, even if at the end of the day they are fossil fuel companies and are going to do whatever they can to protect that 99.9% of their earnings.

It just feels like picking an actual renewable energy company is probably a better bet from an ESG standpoint rather than the massive oil company that put 20 solar panels on itā€™s HQ so it can pretend to care about the environment.