Investing in a climate change fund is usually seen to be a responsible thing to do, so surely offering a climate change fund is something a responsible investment manager might do.
Not according to RCM, a fund manager with a long track record in sustainable management and a very successful (in assset-gathering terms) Ecotrends product. It does not, however, offer a climate change fund, because of concern it does not make sense as an investment strategy.
“We have a fiduciary duty to ensure the products we offer are sustainable,” says Sue Chan, a senior portfolio manager on the sustainable equities team. She points out that investing in solar power, a popular option for climate change funds, would have led to significant losses this year as stocks tumbled.
“The difficulty is the universe of stocks,” says Barbara Evans, sustainability research analyst at RCM. “If you stay true to the label, it’s very limited.” She points out it would seem odd to include Coca-Cola, for example, in a climate change fund, even though her analysis shows the beverage giant has worked extremely hard to mitigate its impact on the environment.
Refusing to take advantage of investors’ eagerness to invest in anything with the label climate change seems like a worthy thing to do if you do not believe it will offer long term returns. Particularly as it means you can avoid the criticism of one of my more cynical colleagues, who claims climate change funds are simply profiteering as millions of people see their homes and livelihood drowned by rising sealevels.