1. Newsroom
  2. Impact investing: reconciling nature and our finances
UBP in the press 17.05.2021

Impact investing: reconciling nature and our finances

Impact investing: reconciling nature and our finances

Raconteur (The Wealth Management 2021 report published in The Sunday Times - 16.05.2021) - The health of our planet is intimately linked to your pension and your long-term financial goals, says Victoria Leggett, Head of Impact Investing at UBP.

My dog and I have a routine. She eats all the biscuits in her dish and then stares intently at the empty bowl, waiting for me to dutifully fill it up again and again. Her unwavering confidence that the biscuits will keep coming, always reminds me of the blind faith the corporate and financial world has that nature will consistently and reliably support our activities. We’ve all been part of this linear ‘take, make, waste’ economy for a long time. We are conditioned to seeing nature as something separate, other – at best something beautiful to spend time in and at worst a free resource. The asset management industry has been particularly narrow in focus, with a reluctance to attribute value to anything which isn’t associated with a monetary charge – particularly if it is invisible, as is often the case with our natural resources.

However, this is beginning to change. There is a realisation that resources aren’t infinite and that climate change will lead to more volatility in ecosystems and the services they provide. As an industry, we are beginning to calculate the true contribution of natural capital to our economy. To quote Tony Juniper, Chair of Natural England and a member of UBP’s Impact Advisory Board, the economy is a wholly owned subsidiary of nature, not the other way around. The numbers are huge. According to the World Economic Forum, more than half of the world’s GDP is dependent on nature and its services – such as the provision of food, fibre and fuel. Three out of four bites of food we eat today depends on animal pollination, says the European Commission's DG Environment communication officer Tanja Franotović (May 2021).

If we start to place a value on the services of nature, it will be truly transformational to the valuations and prospects of our investments and the quality of our retirement.

There will be many winners. Companies that are contributing to a nature-positive economy will enjoy significant growth tailwinds, such as regulation and consumer demand, as well as valuation support. These are businesses that are solving problems – for instance, precision agriculture that enables far lower use of chemicals, bio-based solutions and companies that are using waste as an input. Such businesses can help close the loop of our economy, making it more circular and less extractive. Then there are the big multinationals in the food, clothing and manufacturing sectors, who have vast and complex supply chains. If these businesses work with their supply chains, and if they have long-term thinking and genuine commitments to local communities and habitats, they too could be winners.

But there will also be losers and this is why how we invest – the companies and funds we support – is so important. In the coming years, some sectors are going to face unmanageable risk in many forms. These range from physical risks, such as the ongoing reduction of soil quality that causes flooding or erosion and makes crops less successful, to liabilities, where communities who suffer loss increasingly demand compensation from the corporate world (think oil spills). And then there is transition risk, where businesses of yesterday’s economy struggle to cope with the cost of moving to a nature-positive approach.

How do we navigate this as investors? It may sound simple, but what is good for nature is almost always good for us, and increasingly this applies to our investments too. Fund managers have a fiduciary duty that cannot be seen in solely monetary terms. In ignoring the natural world, asset managers put an increasing level of risk to work in a portfolio and miss opportunities to generate superior returns by viewing investors as part of nature, not separate from it. My dog’s blind faith will, in all likelihood, continue to be rewarded. The same might not be said for our investments.

Victoria Leggett
Head of Impact investing
View her Linkedin profile


Impact investing - Contributing to a more sustainable future

What are the key features of impact investing?

Le news più lette

UBP in the press 26.07.2021

Libor is dead, long live Saron!

Le Temps (26.07.2021) - The final countdown is underway. In less than six months, on 1 January 2022, the world of finance will enter the post-Libor era.

UBP in the press 18.05.2021

Agility: a key to success in Swiss private banking

Le Temps (17.05.2021) - The wealth management sector in Switzerland, seen by some as traditionalist or even downright old-fashioned, has once again shown how its agility and innovativeness still make it the leader.

UBP in the press 12.04.2021

Impact investing’s spread to all asset classes

Option Finance (26.03.2021) – Impact investing – investing with the intention of having a positive impact on the environment and society – originated in the private equity market but is now spreading to all asset classes.

Altro da leggere

UBP in the press 07.09.2021

Positive on corporate debt

Institutional Money (03.09.2021) - This year, we have held – and continue to hold – a positive bias on credit markets. This has been driven by our macro scenario of a robust and sustained global growth recovery as economies normalise following the vaccine rollout, coupled with the significant policy support coming from both monetary and fiscal authorities which should allow global growth to exceed its pre-Covid trend.

UBP in the press 30.08.2021

“Key rates could rise gradually from the second half of 2022”

Article l’Agefi (27.08.2021) - Macroeconomic developments and how central banks are handling them remain the focus for institutional investors. UBP's head of global fixed income Philippe Gräub shares his analysis.

UBP in the press 23.08.2021

The IPCC report – ‘code red’ for humanity

Environmental Finance (12.08.2021) - The latest IPCC report should shock the world into climate action – and for investors that means prioritising positive impact, writes Rupert Welchman.