The Just Stop Oil movement has been splashing the headlines with a bold orange tint. From a surprise confetti shower at former Chancellor George Osborne’s wedding to a daring display by two orange-dye-armed protestors at Sheffield’s Crucible arena, they’re certainly making a lot of noise. But, is all the publicity in vain?
Many are wondering exactly what kind of impact Just Stop Oil is making in the investment market. Andrew Spaxman, a financial planning specialist at Chartered Accountants Lovewell Blake, delves deep into the catalysts propelling ethical investments. He questions if investment firms are pivoting towards greater ESG (Environmental, Social, and Governance) compliance, influenced by the mounting pressure from activists:
- A recent survey found that 57% of investors currently have an ethical investment.
- 53% of respondents in another recent study chose not to pursue an investment deal due to ESG factors.
- Annual investments in clean energy are expected to have risen by 24% by the end of 2023, against 2021 figures.
Ethical investing isn’t a new concept, but traditionally, the primary focus of building an investment portfolio revolved around prioritising security and performance. However, it’s still common for investors to sidestep specific sectors. Driven by personal convictions or stakeholder influence, many opt out of investing in arms manufacturers or companies involved in animal testing. Yet, the pressing question is: Are investors growing wary of fossil fuel companies and their investment potential thanks to protestors?
Lovewell Blake is a firm of Chartered Accountants and Financial Planners that serves more than 10,000 businesses across a wide range of sectors. Financial planning specialist Andrew Spaxman notes:
“It’s essential to understand that the investment landscape isn’t as clear cut as some might like to think. The top players in the oil and gas industry have performed well over recent years which means that a lot of fund managers and investors want to keep them in their portfolios.
“It is commonplace for investors to request that they avoid certain sectors such as arms manufacturers, tobacco producers, gambling firms and companies which use animal testing, but is the avoidance of fossil fuels corporations being added to that list and is the general consensus shifting for investors to be more conscious of this? The answer is no, not in any significant way.”
Spaxman adds that “Contrary to the protesters’ perspective, numerous fossil fuel companies are actually at the forefront of green energy investments, while simultaneously managing their traditional oil and gas operations. It isn’t black or white.
Will Performance-Driven Investors Overlook Green Fuel Technology?
While ethical considerations may not always be paramount, investors recognise the merits of ethical investments and the undeniable role of green energy in the future. Plus, due to environmental concerns, fossil fuels are predicted to face increased taxation, with green energy initiatives already being strongly encouraged through government subsidies, initiatives and funding.
So, what does the future of ethical investment look like? “Investment dynamics are shifting. What some might view as an ‘ethical penalty’ during fluctuating market periods could very well transform into an ‘ethical premium’ over time,” says Andrew Spaxman, “with a long-term growth perspective, ethical investing not only offers returns but also funnels capital towards building a better world. It’s this vision for a sustainable future, rooted in ESG principles, that I believe will stand the test of time, ensuring both company profitability and rewarding returns for investors.”
While headline-grabbing disruptions and roadblocks might catch headlines, Spaxman notes that through ethical investing and initiatives “the end result may very well be the same and with less direct implications to the general public” – noting that pushing for change through the world of finance, rather than disruption, would “encourage positivity around ESG and give rise to increased numbers of ethical investors”