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Can pension funds help reduce climate change risk?

22 Feb 2020

The way people invest their money is changing. A desire for the money they invest to have a positive impact on the world is becoming a higher priority for many investors. Recently, it was found that 85% of individual investors are interested in sustainable investing, and 88% believe it’s possible to find a balance between having a positive impact and making a good return on investments.

This shift has been happening over the past few years, driven by increased public awareness and outrage over global warming and other social issues affecting the world. High profile protestors like Greta Thunberg and Extinction Rebellion mean climate change is regularly covered in the news. Because of this, more of us are demanding more sustainable practices from the companies we interact with.

Increased public demand for sustainability has pushed pension funds and large institutional-scale investors to respond with action. For example, companies such as BlackRock and Brunel have stated their intentions to move towards more sustainable investment practices, making sure their investments have a positive impact. Institutions like these represent a huge chunk of the world’s wealth, and so are in an excellent position to make a difference to the future of our planet through impact investing.

Chris Hulatt, co-founder of Octopus Group, agrees: “At Octopus, we believe institutional investors have a major role to play in tackling today’s critical issues, such as climate change,” he stated. And according to our recent report, more and more funds are using their money for good. One group of institutional investors, who manage $6.8 trillion between them, plan to double their investment into renewable energy over the next five years. 

With this change in tide and heightened demand for impact investing, it’s an exciting time for Mark Williams and Deniz Sevincer to take over as Co-Heads of the Octopus Institutional Funds team. The recently appointed pair are eager for the future of impact investing and the role Octopus can play in helping investors in this area.

“We’ve got really exciting plans for the future,” explained Mark. “We’re currently entrusted with managing over £2bn by 50 institutional investors, across several different funds. And we’re in an excellent position to scale this, helping institutions deliver societal change through their investments while achieving financial returns, too.”

“Increasingly, investing is about more than just profit numbers,” continued Deniz. “I’m really excited about our ambitions in this space. We’re in a great place to help our investors make a real impact with our areas of expertise.”

“Exactly. It’s no longer either/or when it comes to return and impact,” Mark added. “I’m proud that the sectors we invest in, predominantly renewables and healthcare real estate, have a positive impact on society. Knowing this instils a sense of purpose in the way we work.”

With a background in renewable energy, Deniz is a big advocate for sustainable living in his own life, too. “Personally, I’d like my pension to be invested for impact,” he explained. “I really care about the environment, perhaps more than the average person. I stopped using plastic bags a long time ago, and can often be caught juggling my shopping if I forget my usual tote bag.” 

“Renewable technology is really exciting to me as it’s constantly evolving. It has a huge part to play in solving one of our major problems as humans living on this planet,” Deniz continued. “And the prospect of creating more suitable housing for elderly people is equally important. The positive impact on society could be huge, especially given our rapidly ageing population.”

“We’re a very human organisation,” Mark concluded. “We invest in things we believe will benefit society in the future. I’m so pleased interest in impact investing is growing, as it shows we’re all aligned in wanting to limit the damage that has happened to the planet.” 

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