Need to Know | The fundamentals of ESG investing

Candice: [00:00:03] Hello, and welcome back to another episode of Talk Money to Me, I'm Candice

Felicity: [00:00:07] Bourke and I'm Felicity Thomas and this is your need to know wealth podcast where we make the complex simple. 

Candice: [00:00:13] Another week has passed Felicity and it has been very busy. I'm finding there's a lot of market news at the moment. You know, recently we've had the first crypto ETF launch on the Acer. Exciting was exciting. The betashares crypto innovators and I hit a day one record ride of 42 million funds pouring into the ETF. So that was pretty cool. And then the RBA caught up for their monthly board meeting. No surprise here, leaving the cash rate unchanged at 10 basis points.

Felicity: [00:00:41] You know what, Candice? What was actually interesting is they did announce they might actually look to raise rates in 2023 rather than 2024, which they were previously signalling. 

Candice: [00:00:51] Yeah, definitely 

Felicity: [00:00:51] true. We'd love to hear actually what news is interesting new at the moment, what you're reading about. So definitely. Send us an email to PM Team at Equity Mates dot com and we'll hopefully talk about it on our next show. 

Candice: [00:01:04] Or if you don't like sending emails, slide into our social, send us a dam and we will address those questions you've got. 

Felicity: [00:01:11] Did you just ask the audience to slide into and to end

Candice: [00:01:14] up bad 

Felicity: [00:01:16] anyway? So I like Edgard, move on.

Candice: [00:01:19] So another big focus of this week was everything ethical investing in ESG. So very topical right now. You know, in the markets is impact investing, ethical investing and in particular, the climate talks that has just wrapped over in Glasgow. 

Felicity: [00:01:33] Now here it took money to me. We designed this podcast so we can help further educate you on your investment journey by drawing on our expertise and experience in the markets. So spoiler alert, guys, you know, get your notepad, perhaps prepare to learn quite a bit because we're going to be deep diving into the world of ESG impact and actually venture capital investing. 

Candice: [00:01:54] But remember, yes, we are the experts in the room, but do not take our conversation today as personal advice, even though we're registered financial advisers at Shriram Partners. Please know that the podcast and the content discussed today does not constitute financial advice, nor is it a financial product. The content on this podcast is genuine nature, and you should seek appropriate professional advice before making any financial decisions. 

Felicity: [00:02:17] So, Seb, what are we going to get stuck in today? Now that the disclaimer is over and done with

Candice: [00:02:22] now it's out of the way. So we're going to be chatting about all things ESG investing and what that actually means the Sustainable Development Goals and the investing opportunities that you can do to get those goals ticking away. Impact investing and what that means a few ways to invest to make an impact towards climate change action. And then finally, we're going to leave you pondering the idea of climate change because we think it's probably the most important SDG goal to work towards when you are an ESG focussed investor and, you know, leave you with some ESG impact investment thesis thoughts.

Felicity: [00:02:58] Right. So this is going to be a really huge topic. I'm really excited about this. So Candice, can you just a sort of azare off? Please explain to us what ESG investing actually means because it gets thrown around a lot. What does it actually mean? 

Candice: [00:03:12] It does get thrown around a lot. So ESG now the financial jargon term, it stands for environmental, social and governance. So investors are increasingly applying these non-financial factors as part of their analysis process to identify the material risks and growth opportunities when investing in capital markets. So ESG metrics are not commonly part of the mandatory financial reporting that we have seen in the past. However, it's now changing that trend, so it's increasingly more and more prevalent for businesses to make disclosures in the annual report about their standalone sustainability report. So it's a new element that investors are demanding, really? 

Felicity: [00:03:54] Yeah, definitely. I think people are looking at it as a number one priority, 

Candice: [00:03:58] and I think the coronavirus in particular, like it's sped up a lot about cybersecurity tech, but it's also really accelerated the ESG conversation in capital markets because we now know, you know, you need to just have a sustainable long term approach when it comes to how you make financial decisions, government decisions, institutional decisions, definitely. So ESG investing is very broad and you know, it's very much different to each person's perspective, right? So there's no cookie cutter approach. However, there is a select kind of set of menus or strategies that the capital markets work off. So the main ones being you can look at negatively screening or excluding out elements, you know, like look screen out for companies that you're just not into. Maybe they have tobacco exposure, gambling, you know, issues on their human rights, for example, or 

Felicity: [00:04:53] actually another term for it is called norms based screening. 

Candice: [00:04:56] Exactly. So you'd see that as well. And then the flip side of that. The city is you can positively screen for companies, so rewarding companies that are strong in their ESG performances, which leads into sustainably themed investing, such as a fund focussed on access to clean water or renewable energy.

Felicity: [00:05:15] And then you've also got ESG integration. So that actually includes ESG factors in fundamental analysis, which we're actually going to be focussing on today. 

Candice: [00:05:23] Yeah, and when you have the ESG integration as a framework that kind of funnels down into impact investing, you know, looking for companies that make a positive impact on an issue that they're integrating and actively making a return on that impact, right? So yes, they're making profitability. X y z returns on their balance sheet, but they're also communicating their impact, right? You know, how much are they saving on water, for example? And then that leads to active ownership, so engaging deeply with portfolio managers or companies, you know, that are actually having conversations about the ESG targets with the board. 

Felicity: [00:06:00] So that sounds really great, to be completely honest. And so how about a few examples of ESG investment themes? 

Candice: [00:06:08] So there's so many, right? Let's focus on a few of the big topical ones at the moment. Yeah, obviously, climate change elephant, the 

Felicity: [00:06:16] room number one, 

Candice: [00:06:18] you've got welfare and social responsible investing, so that's more of your social and governance play, right? You're not really doing really. Their inclusion and diversity met massive. That's huge female board members, you know, diversification in terms of ages in your workforce, different socioeconomic backgrounds, ethnicity, etc., etc. and then sustainable investment management. So you know, that can be interpreted in many ways, right? In terms of board renumeration, bonuses, options in the companies and so forth. 

Felicity: [00:06:50] Awesome. So Candice, let's break it down even further. So let's break down the A in ESG. You know, we know it stands for environmental, but what exactly does that cover? Yeah. 

Candice: [00:07:01] So the conversation we need to be having is really around the environmental aspect of our beautiful planet. So climate change and carbon emissions, greenhouse gas emissions, air quality and water pollution, biodiversity, how is your company potentially impacting the plants and animals around the area? Deforestation, energy efficiency. You were hearing a lot about hydrogen, for example, future facing commodities that we chatted about last time. Felicity, you know, that is exciting. Uranium, big topic you were pitching selects waste management, water scarcity. So the list goes on. But really just think, guys, when you think ESG investing, the E stands for positive or negative impact to the environment, 

Felicity: [00:07:49] and that's a good way to look at it. So essentially, what you're saying here is look for companies that are heavily invest in these areas for our environment or looking into ways that their company does impact it and trying to improve 

Candice: [00:08:01] yet and dig out their financial report, but also now look for their sustainability report. 

Felicity: [00:08:07] Let's give everyone an example here. So Adobe is a well known and one of the greenest I.T. companies actually in the world. The company has already made some impressive achievements, including obtaining LED certification from more than 70 per cent of its workplaces. It also has ambitious goals, including getting to net zero energy consumption and reducing its packaging packaging, being a resource drain and a big contributor to plastic pollution. You know, Adobe's also a corporate leader in reducing its water use to respond to California's historic drought, even after it had already reduced its water by more than 60 percent since 2000 through means like installing environmentally friendly fixtures and landscaping with native plants. 

Candice: [00:08:52] Don't you just love those really cool tech I.T. businesses?

Felicity: [00:08:55] 100 percent? 

Candice: [00:08:56] I wish we could all work for one, right? And this so-called will you find a 

Felicity: [00:08:59] lot of them are falling in these ethical ETFs, right? So not only do you, you know they're green, but they're also in tech, which is just booming 100 percent and changing the way the way the world is, to be honest. 

Candice: [00:09:12] Yeah, and it's sort of sad to think that the way forward, I think for a lot of exposure in the environmental ESG space is through entrepreneurs. It's through the private sector, like these massive giant I.T. companies saying we demand change. And then that will hopefully make government and other policies follow suit. 

Felicity: [00:09:33] Correct. That's a very good point. And so Candice, let's revert to what does he stand for? 

Candice: [00:09:38] So the stands for social? So these are conversations we're having about our people and the relationships within the organisation that have an impact positive or negative. So customer satisfaction, big one data protection and privacy. Hello, Facebook. Gender and diversity, employee engagement, community relations and how they, you know, engage. With a wider, broader community, human rights labour standards, the list goes on. 

Felicity: [00:10:03] Do you want to give us an example of a company that you think would be, you know, hitting these kind of social goals?

Candice: [00:10:11] So one that comes to my mind is another I.T. giant company, Salesforce. So, you know, apart from being a leader in the tech space, in a cloud based software and CRM database, they're also trailblazing in the realm of corporate philanthropy. So what do people don't realise is when you go through all their financials, they have this fantastic policy called the 1-1-1 philanthropic model. So what that involves is they give one per cent of their product, one percent of their equity and one per cent of their employees time to donate to the non-profit sector. So to date, Salesforce employees have logged more than five million volunteered hours to the not for profit sector, which is just, wow, phenomenal. And he's the financial return 406 million in grants and donations to over 40000 charities and educational institutions. So I just think that's fantastic. 

Felicity: [00:11:07] That is fantastic. And the share price has also performed over 18 and a half per cent in the last 12 months. So not only are they giving so much money away, they're actually increasing their performance on the market. So great investment. All right. Finally, what does the G stand for? 

Candice: [00:11:25] So, G, the final one is governance, and it's all about the standards of running the company. So board compensation and how that's built up the audit committee and the structure around the audit committee. Bribery and corruption. Obviously big no no's. Executive compensation and bonuses. Lobbying the relationships with the government, you know, and political contributions and the whistleblower scheme. So for example, Facebook, right? Oh, sorry, it's now called matter. 

Felicity: [00:11:56] That's a matter. 

Candice: [00:11:57] They've had a lot of press around the whistleblower space at the moment and essentially poor governance and, you know, poor management by Zuckerberg. So this is really a topical conversation and probably more so the most important ESG factor, the G Factor, because Big Tech private enterprises are running countries these days, particularly in the U.S. So, you know, just changing your name is not walking away from a governance issue that there's going to be watch that space. It's just going to keep going 100 percent.

Felicity: [00:12:29] And look, you know, it's you often start with ESG investing, but then some people in some companies like to take it to the next level and fund managers as well by actually screening for the Sustainable Development Goals. 

Candice: [00:12:42] Yet that's a massive point. Felicity and fund managers and ETFs do it as well, providers. So I think it's a super useful tool for us to quickly go over the goals and what the heck stands for. 

Felicity: [00:12:54] All right. So what are the UN Sustainable Development Goals now? The history of the SD goals goes actually back to 2015 actually wasn't really that long ago when the United Nations member state provided a blueprint for peace and prosperity for people on the planet now and into the future. Now at its heart are the 17 Sustainable Development Goals, which are the SD D.J.s, which are an urgent call for action by all countries developed and developing in a global partnership. They recognise that ending poverty and other deprivations must go hand in hand with strategies that improve health education, reduce inequality and spur economic growth, all while tackling climate change and actually working to preserve our oceans and forests. 

Candice: [00:13:38] Amazing. And I love that they have outlined clearly these different goals. So 17. Run us through them super quick. 

Felicity: [00:13:45] No one is achieving global poverty. Number two is achieving zero hunger for all peoples. Number three is ensuring healthy lives and well-being for all ages. For IS quality education for all five is gender equality. Six is clean water and sanitation. Seven is affordable and clean energy. Eight is decent work and economic growth. Nine is build resilient infrastructure and sustainable industry and future innovation. 10 reduces inequalities. 11 sustainable cities and communities. 12 responsible consumption and production. 13. Climate Change 14 is conserve and sustainable use of our oceans. 15. Protect, restore and sustain life on the land so your plants and animals. 16. Promote peace, justice and strong institutions which stand for global peace. And 17. Last but not least, is strengthen the relationships worldwide and partnerships to achieving these goals. How did that go? 

Candice: [00:14:39] That was speed Ren was like speed dating. It was so good. If anyone missed it, just pause. Rewind. But essentially, right, like the 17 goals, it's really encompassing the ESG conversations we just touched on that year.

Felicity: [00:14:52] And as we're focussing on ESG issues of climate change today, really SDG six on which these goals are addressing the impact. Changes the globe need to take on board to reduce greenhouse gas emissions by 2030. So it's very common for fund managers and investment mandates to firstly screen investments for positive ESG metrics and then apply the additional filters of the UN's 17 SDG goals to ensure the fund is truly targeting ESG preferences and making a difference, rather than just saying all this is ESG.

Candice: [00:15:22] Yeah, exactly. They're taking that extra step. And I think since 2015, when the UN came out with this blueprint, like it's really change the conversation because then you can be more true ESG focus like you said. So according to the JAEHYUN report of 2018, you know, traditional impact investment requires us three and a half trillion dollars in order to achieve these strategic goals by 2030. So that's a big number like we really need to pump more money into this.

Felicity: [00:15:50] That is a big number. 

Candice: [00:15:51] It really is. So then that leads us into impact investing. 

Felicity: [00:15:55] All right. Let's go see B. Take it away. 

Candice: [00:15:58] So impact investing is really kind of what the name says. It's making investments with the intention to generate positive, measurable and environmental impacts alongside our favourite thing making money. So, you know, we call talk money to me. Fantastic. 

Felicity: [00:16:14] We're trying to make make money for me. Let's make money 

Candice: [00:16:17] and make an impact. Impact investing can be made in both the emerging and developed markets, and it can range from, you know, different asset classes and obviously different returns, right? The higher you go up on the risk scale, you know, if we're talking like private equity or VC funds, more risk, more reward. And the Growing Impact Investment Market provides capital to address these world's pressing challenging issues that we just Covid off, such as sustainable agricultural farming, renewable energy conservation, microfinance, affordable and accessible basic services like health care, water housing, education list goes on. 

Felicity: [00:16:54] Yeah, so that all makes quite a bit of sense. Now, I guess a common misconception about ESG and impact investing is that investors will actually sacrifice on the capital returns, which we know which just isn't true. You know, in fact, a 2017 study by Noria Equity Research, which is one of the largest financial services group in the Nordic region, reported that from 2012 to 2015, the companies with the highest ESG ratings actually outperformed the lowest rated firms by as much as 40 percent. That's that's huge. To be honest said I hope ESG conscious investors with their day daday Candice. What elements of impact investing do you typically look out for? 

Candice: [00:17:35] Well, a good starting point is to to like we talked about, you know, in our first couple of shows for cities to look at the financials first, right? Like strip out, you know, yes, you're trying to save the planet, but is this company making money? And to your point, you know, another great piece of evidence out there in 2018, Merrill Lynch, which is a big U.S. bank. They also found that ESG companies or ESG focussed companies outperform their peers, and they typically are outperforming three year returns right than their peers. They're more likely to become high quality blue chip stocks. They're also more likely to have larger price declines, so less market volatility and less likely to go bankrupt. So to answer your question, let's look firstly at the financials. First, tick that box. Then let's look at the ESG and the impact. So there's four elements there. You know, firstly being their intention and investors intention to have a social positive or environmental impact through their investment thesis. So, you know, companies normally have mission statements. They're now going further in the heading environmental statements. So look for that intention. And that's where you can go. Okay, I'm happy with that ESG target. They've actually maybe even also identified a U.N. sustainable development goal as well. Secondly, is the investment return expectation. So like I mentioned earlier, you know, once you decide you asset class, let's pick equities, right, then you need to go, Okay, well, is this a realistic financial return for this asset class and also a realistic, you know, minimum return of capital and a minimum return of impact that you're looking for? So typically, whether if it's a fund manager or an ETF, this is where you'll put it against the benchmark. It might be the MSCI ESG World Global Leaders Index as a benchmark took money to me, right? I keep saying that it's about making money. It's all well and good putting money into an ethical fund. But if it's not beating a benchmark, well, then you're not making money. 

Felicity: [00:19:40] You're better off just in an index ETF, to be honest, 

Candice: [00:19:43] that leads into number three. Point to look out for is the return expectations versus the asset class. So impact investment target returns, you know financially can really be a range you can invest in green bonds green. Loans, green, fixed interest, which you're going to get sort of like four or five per cent return versus further up the scale, you know, ABC funding, private equity, you're going to get double digit returns, but the risks are higher. So that's important to note as well. And then finally, the impact measurement, this is where I think, you know, you and I plus you've had a lot of chats with different fund managers about it. There's still a lack of investment in terms of a true measurement for impact. You've got to really rely on the company giving up the data to say Yes, we've made x y z and profits, and these have been a positive, you know, ESG impacts. But I think that's going to change in the next decade. So we need to have a commitment from the markets that investors are screaming out for, you know, to really measure and report on their ESG performance. 

Felicity: [00:20:47] 100 per cent. I actually there's a couple of years ago where we actually wanted all of our portfolios to be able to run an impact report so we can actually report back to our clients saying, you know what you've made, you know, 20 percent net fees, however you know you've actually made x y impact. You've saved water here, you've stopped world hunger here, you know, and so forth. And then we also wanted to be able to donate per cent to different not for profit so we actually can make an impact there. So if anyone listening has this ability, we would love to talk to you because we still haven't managed to actually get that off the ground. But it's something that we're super interested in, 

Candice: [00:21:24] and it's something that's definitely coming, you know, because more and more, I think the government here in Australia is about to commit a huge amount to the IB space, right? So putting more battery chargeable stations around so we can get to that conversation faster. So we will have those conversations, like solar providers are now allowing consumers to know your impact. Eventually, that's going to flow through. But you know, like Felicity said, if you're listening in, you're like it tech guru and you can come up with some sort of solution 

Felicity: [00:21:56] here to help us hit that sharp slide into the dams. Okay, so now we've covered off the basics beyond ESG investing, as well as how you can actually take it a step further. Screen for those SDG goals in order to ensure that you're investing with an impact. We're going to chat about a few different ways in which you can invest into the ESG impact space. But before we do what, we're going to take a quick break and hear from our sponsors. OK, and we're back, I hope you missed us, right, so Candice, if we are going to just focus on addressing climate change as our ESG impact go. There's obviously a few ways that we can do that. So once you pick your asset class, let's assume we're going with growth in equities as per usual. 

Candice: [00:22:41] No brainer. OK, so we've now chosen growth and equities. All right, Felicity. So talk us through, I guess, a couple of options that we can decide to put on money to make an impact. 

Felicity: [00:22:51] All right. So we've decided, you know, our main focus is climate change. So you can invest directly into a listed company. So an equity. In our previous order pad, we spoke about Salix, which actually aims to be top five global uranium producer by the end of the decade. You know, which again, we know uranium is a zero emission source of energy. Then you've got your ETF, so there's quite a few ETFs that we really like. You know, we've got a lot of favourites in this space. You know, a couple of them that will go through is the BetaShares Sustainable Leaders ETF, with the ticker being Athie, which is quite cool. Last 12 months, it's performed over three percent, which is fantastic. Then you've got the BetaShares Climate Change Innovation ETF, which again, tickers quite cool. Air T.H. Earth spelt incorrectly. But when you're 

Candice: [00:23:42] you only get four letters. 

Felicity: [00:23:43] And this inception hasn't even been a year. So it's been, you know, one a half percent since March 2021. Then we've got VanEck, so the VanEck Global Clean Energy ETF, which is clean CLSA any again coal since inception, which again was earlier this year about February. It's been over 15 percent. And then lastly is iShares Global Clean Energy ETF, which is ICL n, which I claim also great play on the ticker could last 12 months has been over 18 percent. 

Candice: [00:24:18] And I just want to quickly mention here in the last 12 months, write all about benchmarking like we're talking about earlier, the ASX 200 index year to date has performed about 13 half per cent. So it it just makes sense in our opinion, and we're going to argue this point later on. It makes financial sense to go green, to be ESG focussed. 

Felicity: [00:24:38] I think so, and I think that's where the momentum is heading, right? So like, you always do want to invest where there is momentum as well. And I think investing in ESG and companies that make a positive difference is where the momentum is going to be for the next 20, 30, 50 years. We don't have a choice, to be honest. 

Candice: [00:24:56] So we've covered off shares, obviously, as option one, option two ETFs. What are some more options if you're keen on ESG impact investing? 

Felicity: [00:25:04] So then you've got investing in an actively managed fund. So you've got Fidelity Sustainable Water and Waste Fund, which the last 12 months performance has been over 28 percent. It's actually outperformed the MSCI ESG Index by one point eighty five percent. So important when you do invest in an active fund manager that they are outperforming the benchmark. 

Candice: [00:25:24] And what this does remind us again, sorry to interrupt you, Felicity. What's the stat on fund managers like top five per cent, right? Always outperform. Or is it too? 

Felicity: [00:25:32] I think it's five per cent actually outperforming the rest don't consistently. So one might outperform one year and they don't, you know, for a couple of years. And it just doesn't make sense to paying those additional fees. But there are some really fantastic fund managers that consistently outperform. You know, I think and you know, we know this when the market's a bit more volatile, you know, that's when an active manager really does come into its own companies. But again, over the long term, just like effects, it kind of just comes out in the wash. So, you know, find a good we've got some good fund managers. We can probably list them another time. Now we've got the BNP Paribas Earth Trust. So now it's only been recently launched, but they do have a similar strategy, although not 100 per cent the same, which is the global equity long short strategy which also had the exposure to the environmental thematic, you know, in a market neutral vehicle. So past six months has been close to 12 percent returns. And then fourth, we have, you know, you can invest in private equity funds and you've got your fit as your venture capital funds. Okay, so those are the five different ways that you can actually invest or look to invest in this thematic or the way that actually the world is kind of moving, which is fantastic. You know, let's do a quick recap actually between the differences between pay and VC funds as we want to ensure you actually know the difference as we're really going to have an amazing two special guests on next week that have a focus in the impact and V-C space in particular. 

Candice: [00:27:07] Yeah, that's right, Felicity. Because remember, I need to know Episode Guys is all about making sure you got the right tools in education. So you're prepped for our special guests interview episode coming up around the bend so quickly will Covid off P A. NVC, you know, funds that primarily different from each other in the following way. So firstly, the types of companies they invest in. Secondly, the levels of capital invested, the amount of equity they obtain in these investments will very much drastically differ from PDC level. And then at what point in the life cycle do they get involved? 

Felicity: [00:27:42] Yeah. So we know that private equity investment firms often take a majority stake being 50 per cent ownership or more. It's usually in more mature companies operating in traditional industries. Now, PE firms usually invest in established businesses that are deteriorating because of inefficiencies. I guess the assumption is that once those inefficiencies and once those inefficiencies are corrected, that business could become a lot more profitable. This is changing a little bit as PE firms are increasingly buying out actually BBC backed tech companies. Which is interesting. 

Candice: [00:28:14] That is interesting. And that's because, in contrast, VC capital investment firms act more as kind of a mentor to these younger start up businesses. So the younger, often tech focussed companies are growing rapidly and the VC firms are jumping on board in, you know, helping them exchange for minority stake of equity. So maybe less than 10 per cent ownership in these businesses to really give their expertise and to help them grow rapidly. So a couple of examples for you. A VC backed companies is Stripe, which is an online payments processing platform headquartered in San Francisco in the U.S., and a really probably famous one we're all hearing about at the moment is Space X, which is the L.A. US based firm. Sorry, not a firm. It's basically the rocket and spaceship provider. It's not a fan of trying to get to Mars, trying to go to the Moon. So both of these asset classes are typically expecting investors to lock away their capital for a certain period of time. And they do have significant investment risks. So, you know, just be careful when you're investing in pay and VC funds. It's often only open to sophisticated or wholesale investors because there's a high minimum investment threshold to jump in. 

Felicity: [00:29:32] Yeah, exactly. And if you haven't actually had an episode on, you know, your early stage investing, suggest you go back to those episodes before actually listening to our interview, but will actually help you a lot before our next interview, which is where we're actually going to be talking to an impact investment manager. Now we want to highlight the importance of addressing climate change. There's so much data out there in relation to negative outcomes of continuing to pollute and destroy our natural environment, oceans and ecosystems. 

Candice: [00:30:01] Yeah, that's right. So in our opinion, climate change is arguably the most important SDG goal to target, and that's because the stats and the estimations just really speak for themselves. So it's estimated that 200 million people will potentially be displaced. And that's we're talking multiple different populations by 2050 due to rising greenhouse gas emissions, which just makes me really sad.

Felicity: [00:30:27] Yeah. 

Candice: [00:30:28] And we're going to be a bit of a downer on this topic at the moment, but we're going to make impact. We're going to make change people. 

Felicity: [00:30:34] Not it's not too late. 

Candice: [00:30:35] No, that's right. It's also estimated that eight trillion dollars worth of damages will arise annually as a result of climate change and all the negative impacts. So that means it's costing the world to just continue to harm our environment. It's also predicted that economic slowdown will occur by 10 to 30 percent, driven mainly by global loss in GDP by 2100. So I'm hoping these stats is really making the decision makers around the world just go right. We need to do something about this because it's bad for the global economy. And in 2016, in fact, 607 companies alone lost 14 billion USD as a result of water scarcity through droughts, floods and other water related risks. So water scarcity, in particular in the climate change conversation, really poses a particularly severe financial risk to companies, you know, which do rely on a lot of water intensity capex to to make their business operate 

Felicity: [00:31:35] and look just like the Covid virus. You can't argue with science. 

Candice: [00:31:39] I agree 100 percent. You can't ignore the facts, the data and science. And that's because, you know, now I've just I feel like the conversation's changing. The globe is no longer asking whether the transition from fossil fuel based in economic model. It's not about a question of should we do that? It's about how quickly should we move into the future economy, right? How are we going to be more low emissions? How are we going to reduce our greenhouse gas emissions? How are we going to address all those biodiversity question marks that we're facing? So. And it's about who's going to finance it, who's going to lead the charge? You know, we do need the three spheres, which is what the U.N. talk about. We need the private. Sector to join in, we need the public sector commit and then we need institutions to all work harmoniously. So that's why you can tell we're really passionate about this space where both ESG investors ourselves and we're super excited to, you know, kick off our interview to talk more about this space. 

Felicity: [00:32:36] Yeah. So we are going to help address all of these questions on how the global actually achieve this by 2030 and 2050. With two very special guests lined up, we'll be chatting to Jeremy Little and Zameen Pavey, who run an ESG impact fund aiming to tackle these climate concerns by investing into early stage deep tech businesses. So we're going to go over with them what deep tech actually is and how it's pioneering the way for innovative, sustainable energy solutions. So with that in mind, stay tuned for our next episode. 

Candice: [00:33:14] Exciting. And please remember, although we are financial advisors, please note our discussion today does not constitute as financial advice. It's just awesome insights into the ESG world and why you should consider investing ESG as your focus in the portfolio. 

Felicity: [00:33:29] And if you'd like to get in contact with the Candice, so I. All of our details are in the show notes below, and our Instagram handle is at Talk Money to Me podcast. So a little 

Candice: [00:33:38] nod to our Nordic friends because they always seem to lead the way the Swedes and the Danes are going to give it a go goodbye. Add your 

Felicity: [00:33:48] terrible. All right. We need someone to come and help us with some language lessons.