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RATHBONE INVESTMENT MANAGEMENT
Sanjiv Tumkur is Head of equity research at Rathbones. Sanjiv graduated from Oxford University with a degree in Philosophy, Politics and Economics and has passed the Institute of Investment Management and Research (IIMR) exams.
Q. In our digitalised world of instant communication, moral values are increasingly being used as social currency, especially by younger generations – and, undoubtedly, the global pandemic has intensified public demand for a more sustainable approach to life in the ‘new normal’. How do you think this new morality will manifest itself in consumer behaviour, and do investors have a role in reshaping post-COVID society? With the pandemic highlighting many areas of previous weakness, could this collective experience be a positive catalyst for change toward a more responsible form of capitalism?
The Covid pandemic has caused the first significant disruption to daily life since the Second World War, and while comparisons with that cataclysmic event are somewhat exaggerated, it has caused many people to reassess what is important to them and what makes their lives meaningful. At the same time people’s awareness of the impact of global warming and social inequality has continued to grow, aided by social media campaigns. The connectedness of the world has been demonstrated by the fact that a new virus could wreak so much havoc globally in such a short space of time. And our social obligations were emphasised by the need to pull together at first to stay at home and protect healthcare systems that were struggling to cope with hospitalisations, and then later to use masks and socially distance, and now to get vaccinated.
This is all manifesting itself in people’s consumption and investment decisions, evidenced by the rapid growth in plant-based diets, increasingly for environmental rather than animal welfare reasons, and in interest in sustainable investment. Government rhetoric is emphasising the need to ‘build back better’ and use public spending to ramp up investment in clean energy infrastructure and in levelling up socially and economically disadvantaged parts of the country.
The collective experience of the pandemic does indeed seem to have been a positive catalyst for a shift to a more responsible form of capitalism.
BESPOKE, TAILORED AND HUMAN
Q. In your day to day experience helping clients meet their financial goals and ambitions, how much importance do you think they place on having a positive impact on the world through their investments? Do you think they see this as being separate from, or integral to their sense of financial health and security?
I think many clients are starting to view the impact of their investments on the world as being integral to their sense of financial health and security. The economic impact of environmental and social issues is becoming clearer. For example, where global warming affects agricultural yields and harvests, which then has implications for food prices. Another example would be extreme weather events having an impact on insurance liabilities. The long-term economic and social costs of not restricting global temperatures to 1.5 degrees above pre-industrial levels are projected to be enormous. Investing to try and promote a more sustainable future is to these clients is a way of ensuring lower future risks to their own, and everyone else’s, financial security.
NOTES TO SELF
Q. If you knew at 25 what you know now with regard to financial planning and investment opportunities, what would you do differently – personally speaking, in terms of a long-term approach to financial security and ethical investment?
I have always had a long-term time horizon when it comes to financial planning and investment and have regularly saved into pensions and ISAs from the beginning of my career. One of the most encouraging aspects in investment over the past 5 -10 years has been the emergence of sustainable investment into the mainstream, and the dispelling of the notion prevalent twenty years ago, that ethical or sustainable investment meant that one would be sacrificing a degree of financial returns. All credible companies now recognise the need to operate more sustainably, to be mindful of all stakeholders, and to minimise their environmental footprint. Governments are now spearheading investment into clean energy infrastructure with increasingly ambitious zero net carbon targets, so the opportunity set for sustainable investment is significantly broader and growing all the time. I earmarked a portion of my savings into sustainable investment from the outset but with the benefit of hindsight, I would have increased this portion.
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