One year ago, we launched our first ESG portfolio range, ‘Bravo’, built using the Progeny investment philosophy in response to an increase in demand for more environmental and sociably responsible investment options. For many, the pandemic and climate change have been a catalyst, bringing to the fore the inextricable links between sustainability, the economy and financial markets.
Bravo ESG – what it is?
Bravo ESG is an evidence-based, total return portfolio range designed using a systematic discipline. It combines a passive and multi-factor approach, whilst staying true to the empirical evidence of multiple factors outperforming over the long term. We put ESG at the core of the investment process, targeting the highest-scoring ESG companies and employing a clear protocol for which companies will and will not be included.
Each portfolio is set to an asset allocation that progressively increases the factors of risk and returns over the portfolio range. They are structured using academic research and the long-term observation of markets and how they work. The funds have been specifically picked to plug in to the asset allocation guidelines which should give comfort when assessing risk.
ESG is more than just a matter of ecology and making positive choices for the planet. It is also about people and our collective future.
One year performance
We saw strong performance throughout 2021 as investors continued to favour high growth companies, which the ESG universe has a large exposure to. Since the start of 2022, we have seen a reversal of this as investors have moved into sectors which have lower ESG scores such as oil and gas, defence and tobacco, following the rise in energy prices and defence spending.
Our hopes for the future
The rise of ESG investing and its importance for investors has been a result of changing mindsets and increased media focus on the impact of climate change. Beyond an individual level, this is also being addressed by governments, businesses and organisations at a global level, particularly following the COP26 summit.
Pre-COVID-19, the transition to a low-carbon economy was already enjoying several tailwinds, but the onset of the pandemic has fuelled this drive as companies, governments and investors appear to have galvanised their efforts in a bid to tackle climate change.
Approximately one fifth of the world’s largest businesses now have net zero commitments, including the sectors that are the biggest contributors to global emissions. In addition to what companies are doing, policymakers are also taking decisive action and governments worldwide have been upping their game with net zero announcements from China, Japan and South Korea.
Global warming is high on the priority list of governments. US President Joe Biden reinstated climate change as a major priority and re-joined the Paris Agreement upon taking office.
Why Bravo ESG?
In summary, the demand for ESG continues as more investors and consumers place a greater emphasis on ESG in their day-to-day decision-making and lifestyle choices as well as their investment preferences.
Investors want to be able to navigate what is on offer and allocate capital to funds making real, measurable change.
The Bravo range helps our clients reflect their principles, while providing the portfolios to match their investment goals. Please get in contact with us today to learn more.