Skip to main content
Commentary General Impact Investment

Staying the course – WHEB remains committed to sustainability investing

Dsodfj resized
Child with marshmallows 1

In 1970 Walter Mischel, a professor of psychology at Stanford University conducted a famous experiment now known as the ‘Stanford Marshmallow experiment’. The experiment involved offering children a choice between one immediate reward in the shape of a single marshmallow, or two marshmallows if they waited for a short period of time.

Some children were unable to contain their impatience and immediately ate the marshmallow. Others managed to withstand the pain of waiting by creating distractions such as talking to themselves, inventing games, and even trying to fall asleep (as one successfully did). In the end, the second group had their patience rewarded with the two marshmallows.

Last in, first out

It currently feels like a similar experiment is taking place in financial markets.  Only a few years ago asset managers were falling over themselves to tap into what were seen as lucrative markets for new ‘ESG’ and sustainability labelled investment funds. We called this the ‘ESG stampede’ as asset managers launched and sought to rebrand existing funds. In 2020 alone, more than 250 European funds were rebadged as sustainable1.

Since then, high interest rates have dampened returns for the mid-cap growth stocks many sustainability fund managers had focused on. ESG has also become a lightning rod for politicians keen to rile their base with the spectre of ‘woke capitalism’.  At the same time, regulators have begun to flex their muscles and demand higher regulatory standards for what constitutes sustainability. In so doing, they have increased compliance costs for fund providers.

Perhaps it is to be expected that the pain of waiting for future rewards is too much for many asset managers. Two years on from the ESG stampede, managers are now franticly reversing out of this market. Data reported in late January showed that at least US$10bn had been withdrawn from ESG-focused funds in 20232. Another recent headline claimed ‘Groups slam brakes on sustainable fund name changes’ in response to slowing demand and higher regulatory costs3. A colleague attending a recent fund management conference reported that one very large fund manager has decided ‘not to bother’ to label any of their ESG-badged funds as sustainable under the FCA’s Sustainability Disclosure Requirements (SDR).

Avoiding the distractions

We view this as largely short-term noise. We know that a large proportion of end investors want to invest in a way that generates a financial return while also supporting positive change in the world. The FCA’s Financial Lives survey, for example, found that 81% of adults surveyed would like the way their money is invested to do some good as well as provide a financial return4. The proportion that feels this way may well be diminished during a cost-of-living crisis. It is also likely to vary by gender and age. But research shows again and again that across all periods and in all groups a substantial proportion of those paying into pensions and savings products want to see positive impact.

We also know that the underlying issues that people care about such as inequality, climate change, ill-health and destruction of the natural environment remain profound challenges for the world. Done well and with integrity, sustainability investing is part of the solution to these challenges. What is more, investors can benefit from the value created by companies in these growing markets.

Sorting the wheat from the chaff

Not everyone is being distracted by the current challenges facing the sustainability investment market. In contrast to many of our asset management peers, clients can trust WHEB to remain totally committed to sustainability impact investing. It is our whole focus and is embedded in our business mission and legal structure. Our approach is to invest in the companies that are most aligned with sustainability. These are companies that derive their growth from solving sustainability challenges. Companies that sell products and services that reduce greenhouse gas emissions or cure life-threatening diseases. We believe companies that enable sustainability will also themselves benefit from growing markets for the products and services that they sell. As owners of these companies, we also help them to maximise their positive sustainability impact by mitigating any negative impacts that they may have.

Like the children in the Stanford marshmallow experiment, our ambition and expectation are that our clients will end up with two marshmallows. A double dividend made up of good financial returns and a positive impact on the world around them.

 

Sign up here to recieve our monthly and quarterly commentaries in your inbox.

 


1 https://www.responsible-investor.com/friday-funds-253-funds-rebadged-as-sustainable-in-2020/
2 https://citywire.com/new-model-adviser/news/great-esg-backlash-green-fund-outflows-in-billions/a2435240
3 https://citywire.com/wealth-manager/news/groups-slam-brakes-on-sustainable-fund-name-changes/a2435154
4 https://www.fca.org.uk/publication/policy/ps23-16.pdf

Important Notices:
Risks include: the price of shares (“Shares”) in FP WHEB Sustainability Fund, WHEB Sustainable Impact Fund or WHEB Environmental Impact Fund may increase or decrease and you may not get back the amount originally invested, for reasons including adverse market and foreign exchange rate movements. Past performance does not predict future returns. The Fund invests in equities and is exposed to price fluctuations in the equity markets, and focuses on investments in mid-sized companies in certain sectors so its performance may not correlate closely with the MSCI World Index (the benchmark). For full risks, please see fund prospectus on www.whebgroup.com

 

General: This information, its contents and any related communication (altogether, the “Information”) is issued by WHEB Asset Management LLP (“WHEB Asset Management”). It is intended for information purposes only and does not constitute or form part of any offer or invitation to buy or sell any security including any shares in the FP WHEB Sustainability Fund or WHEB Sustainable Impact Fund, including in the United States. It should not be relied upon to make an investment decision in relation to Shares in the FP WHEB Sustainability Fund or WHEB Sustainable Impact Fund or otherwise; any such investment decision should be made only on the basis of the Fund scheme documents and appropriate professional advice. This Information does not constitute advice of any kind, investment research or a research recommendation, is in summary form and is subject to change without notice. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming shares. WHEB Asset Management has exercised reasonable care in preparing this Information including using reliable sources, however, makes no representation or warranty relating to its accuracy, reliability or completeness or whether any future event may or may not occur. This Information is only made available to recipients who may lawfully receive it in accordance with applicable laws, regulations and rules and binding guidance of regulators. WHEB Asset Management LLP is registered in England and Wales with number OC 341489 and has its registered office at 7 Cavendish Square, London, W1G 0PE. WHEB Asset Management LLP is authorised and regulated by the Financial Conduct Authority with Firm Reference Number 496413.

 

FP WHEB Sustainability Fund

FundRock Partners Limited (formerly Fund Partners Limited) is the Authorised Corporate Director of the Fund and is authorised and regulated by the Financial Conduct Authority with Firm Reference Number 469278 and has its registered office at 6th Floor Bastion House, 140 London Wall, London, EC2Y 5DN. The state of the origin of the Fund is England and Wales. The Representative in Switzerland is ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich, whilst the Paying Agent is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. Box, 8024 Zurich . The relevant documents such as the prospectus, the key investor information document (KIIDs), the Articles of Association as well as the annual and semi-annual reports may be obtained free of charge from the Representative in Switzerland.

 

WHEB Sustainable Impact Fund

The Manager of the Fund is FundRock Management Company S.A., authorised and regulated by the Luxembourg regulator to act as UCITS management company and has its registered office at 33, rue de Gasperich, L-5826 Hesperange, Grand-Duchy of Luxembourg. The Representative in Switzerland is ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich, whilst the Paying Agent is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. Box, 8024 Zurich. The relevant documents such as the prospectus, the key investor information document (KIIDs), the Articles of Association as well as the annual and semi-annual reports may be obtained free of charge from the representative in Switzerland. The state of the origin of the Fund is Ireland. The Fund is registered for distribution to professional investors in Austria, France, Germany, Italy, Luxembourg, Norway, Singapore, Sweden and the United Kingdom, and is registered for offering to retail investors in Switzerland, Denmark and the Netherlands. The Fund is also available for professional investors in Belgium and Hong Kong. It is not available to investors domiciled in the United States.

 

WHEB Environmental Impact Fund

The Manager of the Fund is FundRock Management Company S.A., authorised and regulated by the Luxembourg regulator to act as UCITS management company and has its registered office at 33, rue de Gasperich, L-5826 Hesperange, Grand-Duchy of Luxembourg. The Fund is registered for distribution to professional investors in the United Kingdom. It is not available to investors domiciled in the United States.

 

The MSCI information may only be used for your internal use, may not be reproduced or re-dissseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www.msci.com).

Sign up to impact fund updates

Sign up below to receive email updates on our impact investment funds.
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
Authorised and regulated by the Financial Conduct Authority Copyright 2024© WHEB. All rights reserved Made by Thursday
How to invest