At EdenTree, we are committed responsible and sustainable investors in UK equities, despite a challenging few years in which Brexit and the pandemic have weighed heavily on share prices and hampered investor confidence in the market.
We believe the UK has a unique opportunity to take a global leadership position as a home for Environmental, Social & Governance (ESG) aware investors, driven by a number of sustained industry trends and a more supportive macro-economic picture for UK equities as we move through 2021.
A key development is the enormous shift in attitude towards ESG issues that we have seen in the past few years, putting the UK government and capital markets on a positive trajectory to embrace responsible and sustainable factors. For example, we now have previously unseen commitments from the UK government to achieve environmental targets.
The pandemic has accelerated this trend in a number of ways. Firstly, it has brought social issues into much greater prominence, clearly highlighting the social inequities and injustice that exist within the current global financial and economic system.
Secondly, a vast number of new fiscal stimulus packages to combat the pandemic slowdown in major developed economies are noticeably targeting green technologies and infrastructure; this was apparent in the UK’s package, which included plans to quadruple offshore wind power, boost hydrogen production, invest in carbon capture technologies and make London the capital of green finance.
Finally, we are seeing strong support from financial institutions and industry bodies to make positive change. For example, Andrew Bailey, the Governor of The Bank of England, has spoken out on the important role that capital markets have to play in achieving the transition to a resilient, carbon-neutral economy.
This is leading us on an irreversible trend towards an increased responsible and sustainable opportunity set for UK equity investors. Combine this with the supportive macro-economic backdrop, low interest rates and low inflation driven by ongoing monetary and fiscal policy, and the hopes of the UK economy reopening as the vaccine rollout continues, and the result could be a compelling recovery story for ESG investors in UK equities — provided they are willing to look through the noise and short-term uncertainty.
When combined, EdenTree’s Responsible & Sustainable UK Equity Fund and Responsible & Sustainable UK Equity Opportunities Fund provide investors a more complete allocation to UK equities as a whole, which should deliver regardless of market environment. Both funds are managed in accordance with our responsible and sustainable approach, with ESG risk factors fully integrated across our investment process.
Having brought one of the first ethical UK equity funds to market more than 30 years ago, we can offer our investors a deep expertise of responsible and sustainable investing within the UK. Now is the time to focus on how the UK is well positioned for longer-term future growth, combined with providing a rich seam of companies that are ESG leaders — offering us as responsible and sustainable investors plenty of stock-picking opportunity.
By Ketan Patel, manager of the EdenTree Responsible & Sustainable UK Equity Fund, and Philip Harris, manager of the EdenTree Responsible & Sustainable UK Equity Opportunities Fund
The views contained herein are not to be taken as advice or recommendation to buy or sell any investment or interest. The value of an investment and the income from it can fall as well as rise, you may not get back the amount originally invested. Past performance should not be seen as a guide to future performance. EdenTree is authorised and regulated by the Financial Conduct Authority and is a member of the Investment Association. Firm Reference Number 527473