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Investing to Save the Planet: How Your Money Can Make a Difference (£10.32, Penguin Business)

ALICE ROSS

This debut book from a senior FT journalist is a near-perfect manual for anyone grappling with sustainable investing but readers looking for straightforward answers may be disappointed. Young Money enlisted Matt Bain, the target reader for this book, to give us his verdict…

Most of us are hyper-aware of the bleak environmental picture for our planet. Alice Ross’s book gives cause for hope. Climate change solutions are firmly on the agenda, and Bank of America predicts that global spending on them ‘could double in value from $1trn to $2trn by 2025’.

Despite COVID’s devastating impact on world economies, these solutions are core to many Government recovery stimulus packages, and COVID could actually accelerate the transition to a cleaner, greener jobs-based economy.

We’re also wising up to our personal power, as investors, to get involved. A previously niche area has exploded in interest in the past five years, and increasing numbers of ordinary people want to know where their money’s going, and to put it in sustainable strategies – 68% of us, according to a recent report by the UK International Development Department.

The go-to manual for wannabe green investors

From fossil fuel giants switching energy solutions to food/agritech startups via the panoply of green transport options, Investing to Save the Planet is the near-perfect manual for anyone interested in grappling with the complex world of sustainable investing.

First off, Ross unpacks everything an absolute investing novice like me needs to know about the basic types of investment out there (I’m probably not the only average Joe whose grasp of equities and bonds is a little fuzzy).

As a self-employed musician dealing with a drastically reduced income, I identify with the millions in precarious post-COVID financial positions with precious little spare capital to risk on bets that the latest North London tech startup will turn unicorn next year.

“As a self-employed musician, I identify with those who have precious little spare capital to risk on the latest North London tech startup”

But Ross empowers us to fully grasp the options available and the risk involved at every level, from safer bets to high-risk gambles for those at the wealthier end of the spectrum.

Many ordinary workers are blissfully unaware of their status as investors via their pension fund, for instance –   Ross’s book is invaluable in identifying the power we each possess to shape the future through our investments, however small.

Debunking green jargon

The new buzz-acronym is ESG: funds labelled Environmental, Social and Governance are the ones to clue into, and Ross guides the reader expertly through the array of fund houses and asset managers seeking your trust, as well as the increasingly common ‘greenwashing’ tactics to see through.

But her book is sustainable investing for grown-ups – there’s no simple or easy path for the innocent soul embarking on a first-time journey of investing conscientiousness.

“There’s no simple or easy path for the innocent soul embarking on a first-time journey of investing conscientiousness”

Divestment is one of the great conundrums the book tackles in depth. Shun the oil and gas giants and stick with obviously greener companies? There’s a strong argument that you’re better off staying in – part of the growing pressure movement to force these companies to switch energy solutions, because giants like Shell and BP will likely play a vital role in the long-term transition to a carbon-neutral economy.

You’ll have to soul-search and establish your personal priorities (and what you’re prepared to trade off, because there will always be one). Could you invest in a climate change leader like Philip Morris, which also makes Marlboro cigarettes? Why not invest in a bank ranked highly on environmental scores by committing to 100% renewable energy targets, like JP Morgan? Sure, but remember they are still massive fossil fuel financiers.

The difficult choices that lie ahead

In a book about sustainable investing, Ross naturally focuses on how the investor can prioritise the ‘E’ of ESG, but she does makes it clear that the ‘S’ and ‘G’ will often be traded off. When it comes to the ethical and governance strengths of many companies spearheading the climate solutions revolution, it’s a more complex picture.

“You’ll have to soul-search and establish your personal priorities – and what you’re prepared to trade off”

One question I was left with was how far will people be prepared to trade off their ethical and social concerns in order to save the planet? Jeff Bezos may have ploughed $800 million into the Bezos Earth Fund, but it’s impossible to ignore the enormous damage his mega-corp Amazon has done to the high street, or overlook the murky world of its workers’ conditions. Elon Musk’s Tesla is the poster-boy for electric cars, but a lack of disclosed executive pay and sustainability goals make the corporation another dubious choice of saviour.

Then there is the question of how far authoritarian, aggressive regimes like China could benefit from the green investment revolution. Semi-conductor technology blazes the trail for an energy-efficient future – for instance the Pictet Clean Energy fund holds Chinese-listed NXP Semiconductors on its list.  Chinese electric battery maker CATL is a major player in the market, supplying firms like Toyota and BMW.

Tackling the causes of climate change is the most important thing we can do to save millions of lives, jobs and homes for future generations. But saving the planet is also about preserving cherished belief systems and ways of life – namely free speech and democracy – which are under threat from said regimes as they expand their world power and influence.

Difficult moments of conflict and confrontation are likely around the corner, not just on the world stage, but in the consciences of the new generation of investors.