Tennis - Even as Credit Suisse and their brand ambassador, Roger Federer, have come under fire for the bank's investments related to fossil fuels, Credit Suisse Private Bank Australia's chief investment officer Andrew McAuley has said that sustainable investing, or socially responsible investing, will continue to evolve rapidly.
Sustainable investing is usually considered to mean the exclusion of unethical investments in industries such as alcohol, tobacco, gambling, fossil fuel miners and weapons manufacturers. According to Financial Standard, McAuley says, "Sustainable investing is a long term trend that every investor needs to consider.
Ultimately stocks with poor ESG credentials will trade at a discount. It starts with a philosophy and a framework to implement. Looking into the nuts and bolts can become quite complex, but having a clear understanding of the beliefs you want incorporated in your investments will be a good guide to at least improving the sustainability characteristics of your portfolio."
On the question of sustainable investing being profitable, McAuley says, "The most common question about sustainable investing is do I have to sacrifice returns? The answer is a clear no... Harvard did a study of the studies and found in 80% of cases, there was a proven link between sustainability and positive share price performance.
It is still not clear that an ESG overlay can provide investors with a fully diversified portfolio. The situation is improving with increased ESG screened active and passive (ETF) solutions available, and these will continue to grow.
However, in asset classes such as hedge funds and private equity, the choice is still limited. But McAuley adds that it is difficult to exclude fossil fules completely. "Without fossil fuels the world will grind to a halt and poverty will grow.
It is difficult to exclude the use of fossil fuels completely. For example, you may exclude mining companies from your portfolio because they use fossil fuel intensively. But there may be a large miner which is implementing the absolute best practice at reducing fossil fuel use.
Rather than exclude it, investors may prefer to encourage it by including it in their portfolio." In recent weeks, climate activists have targeted the bank for their investments in fossil fuels and also targeted the 20-time Grand Slam champion Roger Federer as he is the bank's ambassador.
Federer was forced to issue a statement on the issue in which he said, "I take the impacts and threat of climate change very seriously, particularly as my family and I arrive in Australia amidst devastation from the bushfires.
As the father of four young children and a fervent supporter of universal education, I have a great deal of respect and admiration for the youth climate movement, and I am grateful to young climate activists for pushing us all to examine our behaviors and act on innovative solutions.
We owe it to them and ourselves to listen. I appreciate reminders of my responsibility as a private individual, as an athlete and as an entrepreneur, and I'm committed to using this privileged position to dialogue on important issues with my sponsors."