Ol’ Mother Earth is heating up like a dirty great big cake

“..and, if we’re not careful, the icing’s gonna melt.”

Dave Angel Eco Warrior

Image credit: BBC TV

For those who remember the 90s BBC TV series, The Fast Show, these are the inimitable words of Dave Angel, Eco Warrior.  More than 25 years on, the overwhelming verdict is that we’re still not being careful enough.

This week saw the publication of ESG Accord’s “DEEP-DIVE industry report” for Tax Efficient Vehicles, for which Vala is a proud sponsor.

So, why have we sponsored it?  Sustainability is the lens through which we view our investments.  It’s partly because we firmly believe that in order for us and future generations to exist sustainably on the planet, all parts of society – individuals, communities and employers – need to do ‘better’ (incidentally, that’s the name of one of our EIS Portfolios) but also, central to our investment thesis, that companies which are taking deliberate steps to becoming more sustainable are more likely to succeed and will be more valuable.  We are delighted that the Report agrees and states:

“providers that have managed investee company growth and have good ESG/Sustainable data/reporting mechanisms are likely to achieve better exit values than those that have done nothing!”

Now, the FCA’s concern, which led to the production of the Sustainability Disclosure Requirements and the Investment Labels, is that investors’ desire to reflect E, S & G in their investment decisions has inevitably led to investment managers making claims about their ESG credentials and to the [justifiable] claims against some of ‘greenwashing’.  I wrote about this in a previous blog here but this leads us back to the ESG Accord report and why we feel it is so important.

I strongly recommend reading the report and accessing ESG Accord’s free Database, providing detail on the ESG approach of a host of Tax Efficient Vehicle providers. I know from personal experience the amount of time it took to complete the rigorous questionnaire and the subsequent interviews with the ESG Accord team.

We at Vala, and more broadly across the investment industry, are not going to get everything right in our pursuit of greater sustainability, and this isn’t going to lead to perfect investment decision-making, but it is about the demonstration & reporting of both intent and progress.  My firm belief, shared by the writers of the report, is that if you cannot verify and report on any ‘green’ claim you are making, then you shouldn’t be making the claim.

Of course, Dave Angel would be the first to acknowledge that this isn’t just about the environment, or more specifically climate change – it’s S and G, as well as the E – but it is the magnitude of these challenges that crystallise so profoundly why helping investors put their funds in to financial products which measurably deliver their investment objectives, is central to what the FCA wants to achieve.  The ESG Accord Report is an important part of this process and why we have chosen to sponsor it.

James Faulkner, Managing Director and Co-Founder


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