Explaining and Exploring Sustainable Investment - Flipbook - Page 5
1970s
1980s
and
As social and environmental activism spread
through the following decades, so the demand for
more ethical and sustainable investment options
grew. The first Earth Day was celebrated back in
1970, for example, and disasters such as Three
Mile Island in the US and Chernobyl in the Ukraine,
plus growing evidence of the catastrophic impact
of climate change, focused attention on green
investment. The first World Climate Conference was
in 1979, opening up the science of climate change
and starting on the path towards global recognition
of the danger of greenhouse gases.
The fight against the apartheid regime in South
Africa also accelerated the promotion of ethical
investment in the 1980s, and EIRIS was established
in 1983 as the UK’s first independent research
service focused on these strategies.
Elsewhere in the UK, Friends Provident (founded in
1832 to provide life assurance for members of the
Society of Friends, more commonly known – and
bringing us back to the start – as Quakers) offered
to manage an ethical fund with investment criteria
determined by a separate committee, and this led to
the launch of the Stewardship range in the mid-1980s.
Meanwhile, in 1983, the United Nations asked
former Norwegian prime minister Gro Harlem
Brundtland to run a World Commission on
Environment and Development, seeking better
ways to harmonise ecology with prosperity. After
four years, the Brundtland Commission released its
Our Common Future report, producing the seminal
definition of sustainable development we quote on
page 7.
1990s
2020s
to
and beyond
Regulatory developments have continued to push
the sustainable agenda forward over recent years,
starting with the Rio Earth Summit in 1992, which
rallied the world to adopt Agenda 21 – a set of goals
in sustainable development for the 21st century.
Next came the Kyoto Protocol of 1997, an
international treaty that commits countries to reduce
greenhouse gas emissions based on the scientific
consensus that global warming is occurring. This
was eventually superseded by the Paris Agreement,
signed in 2016, and various commitments at the
recent COP26 event, with a goal to limit average
temperature rises, compared to industrial levels, to
less than 2 degrees centigrade and ideally less
than 1.5. The seminal Intergovernmental Panel
on Climate Change (IPCC) report, published in
October 2018, shocked many with its conclusion:
to meet the 1.5 degree target and stand any chance
of keeping climate change manageable, we need
to halve absolute emissions by 2030.
As demand for ethical and sustainable investing has
grown, so have the types of strategies available and
the terms used to describe them: from ethical, to SRI
(socially responsible investing), to sustainable, to ESG.
In the midst of this, the term ESG was coined in a
landmark 2005 study entitled Who Cares Wins. This
came out of then UN Secretary General Kofi Annan
writing to multiple CEOs of financial institutions seeking
ways to integrate ESG into capital markets. The report
made the case that embedding ESG factors makes
good business sense and leads to more sustainable
markets and better outcomes for societies.
This formed the backbone for the launch of the
Principles for Responsible Investment (PRI) at the
New York Stock Exchange in 2006 and the UN
has continued to drive the sustainable agenda
with its Millennium Goals, which became the
Sustainable Development Goals (SDGs). These are
an internationally recognised set of goals to aim for
by 2030, which will help the world develop in a
more sustainable way.
Liontrust: Explaining and exploring sustainable investment - 5
