Family offices are increasingly investing in funds that address climate change, specialist Investment Adviser Rachel Etherington says.
The Crestone Wealth Management adviser spoke to the FINSIA Podcast on the eve of COP26 to talk about the opportunities for financial services in taking a leading role to avert an environmental catastrophe.
Rachel, who has been involved in sustainable and ESG projects in the US, UK and Australia over the past 15 years, said: “We're faced with the existential risk.
“To avert the dire consequences as a result of climate change and biodiversity loss, we are going to have to invest a lot of money.
“Trillions of dollars will need to be invested annually if we are to achieve net zero by 2050, keeping global temperatures ideally around 1.5C - if indeed that's still possible, but certainly under two degrees.”
Global government infrastructure spending needs to be focused on mitigating the threat posed by climate change as well as building to adapt to exceptionally high temperatures and increased flooding. And even if the emissions tap is turned off immediately, because of the nature of emissions, warming will continue for centuries.
“So there's undoubtedly clear roles for government, but where I focus is the private investment area,” she said, adding that she was “absolutely seeing more and more focus” there.
“What's interesting dealing with multi-generations in families … some of my clients are in their seventies and they are leading a charge.
“This isn't across the board, but what is unequivocal is it’s people in their 50s, 40s, 30s. It's not just the sort of 20-year-olds who are deeply committed, convinced by all of these issues.
“The urgency and the appetite is growing. More and more families are seeing this as a way to create legacy and do something of real meaning.That's very interesting and powerful.
“One of my clients said to me the other day that there's no point then making lots of money in a way that is going that they can then bequeath to their children if they have, by doing so increased and magnified the problems that their children are going to inherit as a result of climate change and biodiversity loss.”
Inflows into funds in sustainable investment wasn't derailed by COVID as it was during the GFC, according to Rachel who added: “It was really reinforced during COVID. I think a lot of investors had this sort of existential fear and this realisation that actually we are not all powerful.”
It’s not just the wealthy who are focused on climate, says Rachael, pointing to surveys that showed the electorate is increasingly concerned - more worried than about the state of the economy.
“That's huge because normally whichever country you are in, the economy is a number one concern,” she says.
Hear more from Rachel Etherington on the latest FINSIA podcast episode: