Over the past decade, the value of capital going into specialist ‘ethical/sustainable’ funds has seen exponential growth. More recently even many mainstream have sold off holdings in companies considered to be lagging when it comes to addressing their environmental responsibilities.
And before doing so fund managers are now taking a proactive stance in pushing boards of the companies they are invested in to take action. But now things are going one step further. A growing number of investors want to invest according to vegan principles. And the investment products that facilitate that will surely quickly follow. In fact, the first dedicated vegan ETF launches this year.
Over the past 12 months, anyone who regularly follows business and financial news can’t but help to have noticed the growing extent of the coverage around ethical and sustainable investment. The coverage may be a little ahead of the actual percentage of total investment capital going into ethical and sustainable funds but that can be explained by demographics.
Barclays research suggests that one in 5 under 40s have invested with ethics and sustainability their primary motivation. That’s 20% and many under 40s don’t invest full-stop, other than in an obligatory workplace pension that often has limited options. So it’s understandable why the investment industry, and media coverage, is ramping up coverage of the ethical investment theme.
With a majority of active investors picking up the pace from the age of 40 on as retirement gradually becomes more than a distant theoretical concept, over the next decade or so the influence of ethical investors will grow. Triodos Bank recently published details from its Annual Impact Investing survey:
Investors around the world are unleashing the power of capital to have a positive impact on the world. The UK investment market is no exception. Estimated to be worth some £15 billion in 2016, Triodos Bank’s latest Annual Impact Investing survey suggests that we are on the cusp of accelerated growth over the next decade. With a forecast of 173% growth, our analysis – in partnership with research firm Development Economics – predicts that the market is set to be worth a huge £48bn by 2027.
And vegan investing is an obvious next step for the estimated 600,000 vegans now living in the UK. A majority are also from a younger demographic and the number is growing quickly. Environment concerns are the biggest motivation for going vegan, due to the particularly high percentage of overall harmful emissions that result from the meat and dairy industries.
The ‘US Vegan Climate ETF’ is set to be launched by Beyond Advisers. It won’t purely invest in ‘pro-vegan’ companies but will only invest in ‘vegan friendly’ stocks. It will exclude any companies “engaged in animal exploitation, defence, human rights abuses, fossil fuels extraction and energy production, and other environmentally damaging activities”.
The ETF will be made up of a basket of 300 US companies and its biggest holdings are tipped to be Apple, Microsoft and Alphabet. ‘Beyond Meat’, the Silicon Valley protein alternative company that develops products that are as close to meat as possible in taste, texture and smell, is tipped to IPO this year and would also seem a likely holding in the ETF, if its analysts like the look of its financials.
More vegan funds and ETFs can be guaranteed to follow. For vegans who want to invest now, there are also some other existing alternatives that don’t involve a great deal of compromise. The Kames Ethical Equity funds states that It doesn’t invest in “any company that makes or sells meat, poultry, fish or dairy products, or slaughterhouse by-products.”
And the five year-old Threadneedle UK Social Bond fund makes loans to companies based on a qualifying criteria of making a positive social impact.