Global warming ESG investing UK

As UK temperatures hit record highs this week, one of the country’s top investment analysts warns that it is now firmly within the interest of investors to act for good. 

As the UK basks in the alarming highs of a heat wave, with some regions recording their hottest day on record, now is the time for investors to act in the interest of the planet; experts recommend.

News outlets are now reporting that extreme phases of weather will surely become the norm for the UK, and there is little doubt that its impact is becoming highly interlinked with the global warming crisis.

With trains cancelled, offices closes and emergency services stretched to their very limit, it’s difficult to deny the economic impact of the soaring temperatures.

Emma Wall

Speaking to The Fintech Times, Emma Wall, head of investment analysis and research at Hargreaves Lansdown, expresses that, although the reaction of the stock market has been somewhat muted up until this point, “investors should take heed – extreme weather is bad news for economic growth.”

Wall points to the hurricane-prone environment of the US as a key example, stating that each event costs the country’s economy on average $1billion in repair costs and economic disruption.

“While hurricane destruction is more physical than a heatwave,” she comments, “there are similar productivity implications for periods of extreme heat.”

Despite the chaos, Wall emphasises that the world should not remain sitting ducks. In her opinion, governments, policymakers and regulators have the power and resources to mitigate climate risks to the economy, and both dedication and investment, in particular, are key to the task.

From her extensive overview of the market, Wall is optimistic that retail investors are already making positive movements in this space. “Over the last couple of years, Investment Association figures have shown responsible investment funds climb from being niche players to the most popular in terms of flows,” she explains.

Wall’s comments are affirmed by findings of the behavioural finance experts Oxford Risk. Its research, which was initially published in March 2022, found that 50 per cent of investors intend to move some of their funds, including pensions, into environmental, social and governance (ESG) this year with one in seven planning to move 60 per cent or more of their funds.

And it appears that the industry is responding to the increased demand for responsible investing. Towards the end of last year, the climate-focused capital raising and strategic advisory firm Climate Solutions announced the launch of its online marketplace for institutional investors called Climarket.

The digital platform connects banks, family offices, VCs, private equity funds, fund managers and high-net-worth individuals with debt and project finance investment opportunities within Climate Solution’s five investment themes of energy transition, sustainable agriculture, net-zero real estate, water solutions and the circular economy.

Wall’s underlying point is that identifiable, climate-friendly movements are now becoming increasingly regular appearances within the portfolios of investors.

“The top 20 monthly most sold funds with Hargreaves Lansdown clients – for many years awash with global and tech funds – now regularly feature ESG options,” Wall explains.

“As temperatures have risen over the last six weeks, across the responsible investing universe of impact, ESG, ethical and sustainable funds, two of the most popular funds are those that invest in clean energy. These are providing essential investment to wean the world off fossil fuels and tackle the climate crisis.”

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