A Christmas Carol of Sustainable Investing
Back
Article Type
Sustainability Soapbox
Topic
Responsible Investing
Published
December 17, 2024
Read time
3 mins
Author
Georgina Laird
Share

It was Christmas Eve, in the bustling city of Financeville, where a shrewd, but miserly, investor named Ebenezer Scrooge lived. Known for his sharp mind, Scrooge’s heart was as cold as the winter wind. He cared little for the environment or the well-being of others, focusing solely on maximising his profits. However, this Christmas Eve, three spirits would change his perspective on investing forever.


The Ghost of Investments Past

The first spirit, the Ghost of Investments Past, appeared before Scrooge in a swirl of smoke. Scrooge coughed, “This must be a dream of some sort.” But the spirit took Scrooge firmly by the hand, leading him on a journey through his early investment years. He saw factories belching smoke into the sky, rivers polluted with industrial waste, and communities suffering from poor working conditions. “Why would you show me these happiest of times?” asked Scrooge, as he looked on at the detrimental impacts of his quest for profits.

 

The Ghost of Investments Present

No sooner had Scrooge found himself back in bed, than the Ghost of Investments Present appeared. “But I know how I invest today,” protested Scrooge. The spirit, a jolly figure surrounded by images of thriving businesses and happy communities, introduced Scrooge to environmental, social and governance (ESG) integration. They visited an electric vehicle manufacturer with low carbon emissions, a clothing company with exemplary labour practices, and an insurance business committed to transparency and ethical leadership. “But what difference are electric vehicles and exemplary labour practices going to make really?” Scrooge demanded,” They’ll never turn me a profit!”

 

The Ghost of Investments Yet to Come

Once more Scrooge found himself bolt upright in bed. A solemn figure shrouded in darkness appeared. “I know who you are spirit, but I doubt there is anything you could show me that could sway me. The spirit revealed a bleak future where environmental crises and social unrest had escalated. There was market instability, and Scrooge saw the downfall of many companies in his portfolio. Scrooge turned form the scene and yelled into the dark void under the hood of the spirit, “I see it now! Oh, how I should have been more sustainable. And yet spirit, is there nothing I can do to avoid this catastrophe?”. The spirit simply gestured towards the window where a new day was dawning.

 

A Strategic Shift

Awakening from his spectral journey, Scrooge was struck by an immediate resolve. He would integrate sustainable investing principles into his portfolio. He ran to the window and looked out. Snow was falling and there was gladness in his heart. “You boy!” he called out, “What day is this? No, never mind, here, take this sixpence and go to Aegon Asset Management, and ask them about their ESG criteria and diversification of my portfolio! I want companies that host strong environmental management, just social policies, and robust governance!"

 

The Benefits of Sustainable Investing

Scrooge’s transformation inspired a wave of sustainable investment practices in Financeville, fostering a more resilient and prosperous community. Scrooge discovered that the companies playing an active role in adapting to and mitigating some of the greatest challenges to society were rewarded through policy and legislation. He found that the companies that scored highly on ESG factors were well-run businesses with happy stakeholders, better at avoiding major controversies that can erode value.

 

As we reflect on the year and plan for the future, let us remember that our financial decisions can be a force for good. Happy holidays and prosperous investing!

 

Disclosures

Author

Georgina Laird
Senior Responsible Investment Associate

Georgina Laird is a senior responsible investment associate responsible for analyzing and monitoring environmental, social and governance factors within the firm’s sustainability-themed equity and multi-asset mandates, and engaging with investee companies on a regular basis.

View profile
Related Articles
View all Aegon insights