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New Year, New Start

Refreshing responsible investing

Investing newsroom
Fisher Funds , Originally written by Frank Jasper, past Chief Investment Officer

Fisher Funds
Originally written by Frank Jasper, past Chief Investment Officer | Email Fisher Funds »

27 January, 2021

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Responsible investing is one of the key drivers of how we manage your money. We firmly believe that this is not only the right thing to do but it is the smart thing to do. Companies with business models that are not sustainable, either socially or environmentally, ultimately make bad investments. To start 2021 we made two important amendments to our responsible investing approach; excluding investment in oil and gas companies from all portfolios as well as companies in the gambling, gaming and associated industries.  

It’s that time of the year. New Year’s resolutions, morning runs, a virtuous diet and maybe even a little less coffee than usual. Unfortunately most of these resolutions, at least mine, don’t make it to February as the reality of getting back to the daily grind begins to bite.

This year your investments have made a fresh start, but one that will last.

Investing your money responsibly is at the heart of Fisher Funds’ purpose. We have always regarded this as not only the right thing to do but the smart thing, that will result in long run returns.

Quality, well run business with long term growth aspirations take a long run view. That often means balancing short financial outcomes with a sustainable attitude to customers, the environment and society in general. History is littered with examples of companies that forgot this and that were irreparably damaged. Get that balance right and a business goes a long way towards building long run sustainable customer franchise supporting ongoing profit growth and ultimately a higher share price. 

Of course the world is not static and what was responsible or sustainable yesterday may not be today. We have always acknowledged this and been clear that our responsible investing policy would adapt over time to the changing social, market and regulatory environment.

The time for change has come. 

Effective 31 December 2020 Fisher Funds has amended its responsible investing policy adding two new broad industry exclusions.

1. Fossil fuels

Any responsible investment policy on the impact of carbon is controversial, with staunch advocates on both sides of the aisle. We have endeavoured to take an evidence based approach, balancing realism and economics with a concern for the environment and the impact of carbon on climate change.

Since the formal inception of our Responsible Investing policy we have excluded any investment in coal and the coal mining industry. At the time we launched the policy we highlighted the role that oil and gas still played in the global economy and the fact the economics of alternative energy were still lagging behind fossil fuels. We also noted that this would be subject to ongoing review.

The economics of renewables have changed. While a complete discussion of this and of the pluses and minuses of different energy sources is well and truly beyond the scope of this article recent analysis by financial advisory firm Lazard highlights just how cost competitive renewables have become. This will ultimately presages the ongoing move to renewables and risks stranding oil and gas assets.

The time is right, in our view, then to make the next step in our policy adding an exclusion to owners of oil and gas reserves into the Fisher Funds responsible investing policy which was been done with effect mid December.

 

2. Gambling and gambling hardware and software 

Another controversial industry is the gambling industry. We have added this as a restricted industry and will no longer permit investment in our portfolios in these companies.

Our guiding principle when we considered gambling is to look at the balance of harm from gambling versus social good or entertainment it provides. For many gamblers it is a product that can be used responsibly - the odd lotto ticket, at least for me, is a fun way to donate some money to charity!

Unfortunately that is not true of a subsection of gamblers with the social harm from this activity, based on the research we have reviewed, dramatically outweighing the benefits from an odd flutter. On balance we felt this was not an industry neither Fisher Funds nor our clients would support.

So it is a New Year and a new start for our responsible investing framework with an evolution of our approach that we believe is not only the right thing to do but ultimately protects portfolios from risk and that will result in higher long term returns.



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