Harry and Meghan flog sustainable investing

The world is abuzz with news on sustainability. The incoming tide of news is strong and can be hard to decipher the signal from the noise. Here are 5 global and domestic items gaining traction.

FMA cracking down on transparency

The Financial Markets Authority – Te Mana Tātai Hokohoko – has outlined new guidance to firms advertising financial products. Essentially this shift means the transparency of any advertisements must be absolute; no confusing omissions, no unsubstantiated claims, and no misleading impressions created. 

While this appears to be more targeted at making financial firms disclose risk, it also provides motivation for general transparency about what exactly you’re investing in – so you may be able to see more clearly how ‘green’ your options are. Optimistically we could see this feeding back from firms to companies and funds themselves to improve transparency at earlier stages too; time will tell if it goes that far.

Japan’s making moves 

The Bank of Japan announced in July it would be buying green bonds to use in its foreign reserves, as part of wider efforts to promote investment in activities aimed at combating climate change. Initially this was mainly a symbolic move as the Ministry of Finance is predominantly in charge of these bonds. But recently Finance Minister Shunuchu Suzuki doubled down and announced that the purchasing of ESG securities would be going ahead. 

“Revitalising new ESG investment will help achieve a greener society and carbon neutrality in 2050,” Suzuki said. “As the ESG bond market grows, I believe investment in ESG bonds will increase from now on.”

… so are Harry and Meghan

Sustainable investing is so popular now that even the royals are doing it. Harry and Meghan have confirmed their partnership with a five-year-old firm, Ethic, which has garnered mixed reactions.

Ethic has said in a statement that it was hoping the high profile of the Duke and Duchess would make ESG investing more popular. 

While it’s hard at this point to comment on Ethic (or the authenticity of this move), it’s good to see a step like this sparking more discussion around sustainable investments. Articles on this subject run the gamut from Forbes to the Daily Star, with a wide range of focal points.

Government’s Emissions Reduction Plan

It may be lost amid Covid-related news at the moment, but the Government has released its draft to the public for feedback. We were meant to see something in law by the end of this year, but this has been pushed back to May 2022. New Zealanders have until 24th November to have their say, with the Government calling particularly on the private sector to suggest what could be done and how the Government could assist.

It seems inevitable that legislation of this magnitude should have an impact on many business practices on our journey to 2050 net-zero. This is one to keep an eye on for sure, especially with the Glasgow Climate Change Conference in November potentially re-centring global targets.

Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill advancing

Back to finance – this Bill aims to “implement a single broad policy to broaden non-financial reporting”, specifically in regards to climate-related disclosures. This would essentially set a blueprint for Government-mandated reporting in the financial sector, which we could see carry over to other sectors eventually. 

This is now in the Committee of Whole House, where MPs will go over the details and vote on proposed changes. After that it has one more reading to pass before it can be given Royal Assent and become an Act.*

Again, this could help investors determine the authenticity of ‘green’ efforts. While sustainability isn’t all about climate, having climate-related reporting mandated is a step in the right direction for promoting cleaner practice.

[Editor: Legislation passed 21 October.]

Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawke’s Bay-based CEFEX certified financial planning and advisory firm. 

The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

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