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With a lot of people consuming more content online with many of us on lockdown at home, we have decided to launch a series of communications called “Letters from Lockdown”. Each week, one of our employees will write about their thoughts on how Covid-19 is affecting the world as we know it, as well as taking the opportunity to talk more about our new Responsible Futures portfolio and some of the things happening here at Waverton.

Our first letter comes from our Compliance Manager, Rebecca Kowalski who, in light of the fact today is official Earth Day, reflects on the potential impact of our sustainable investment proposition. Rebecca tends to wear many hats (not just to disguise her undyed roots at present) and has been delighted to be part of the Responsible Futures team, as well as looking after day to  day compliance within the firm.  

First surviving, then time for thriving

The Coronavirus pandemic has affected us in different ways, whether it be loss of a loved one, loss of earnings, loneliness or worries about what might come next.  With these new personal problems, many of us will no longer be dwelling on the wider issues that previously occupied our thoughts, such as Brexit or climate change.   

Likewise, here at Waverton, our immediate priorities over the last few weeks have been to continue to deliver our services to clients and keep in touch with them during these challenging times. We have fully converted to working from home and are happily using new technology to facilitate client and staff meetings  

Personally, with no young children to homeschool, lock down is treating me quite kindly. If anything, it makes it easier for me to keep tabs on my offspring (aged 20 to 25) and limits how much mischief they can cause! My husband is a key worker, so I mainly have the house to myself whilst home working.  

This gives me time to jot down some thoughts on how the global pandemic impacts on our Responsible Futures investmenproposition. For these of you not yet familiar, this is a range of multi-asset portfolios investing in companies that offer environmental and social benefits and/or are mindful of all of their stakeholders. This means staff, customers and local communities, as well as the shareholders. The portfolios invest in line with the UN Sustainable Development Goals, targeting businesses whose activities can help meet world goals, such as: 

Ending poverty and hunger 

  • Improving health and education 
  • Combating climate change 
  • Responsible economic growth and consumption 

Resorting to the financial industry jargon, our portfolio managers Canaccord Genuity,  include ESG considerations when selecting investments, that’s E for environment (the planet), S for Social (people) and G for governance (good business practice).  

As today is Earth Day, lets start with the E Pre-pandemic, climate change was one of the most widely reported news issues. Global school strikes, Australian forest fires and floods in the UK had made sure of that.  While our attention is currently focusedunderstandably, on Covid-19 news, there are still lots of headlines relating to climate change and some of these directly link to the spread of the Coronavirus.   

One article this week quoted research carried out by the Martin Luther University in Germany. This showed that 78% of the Coronavirus deaths across Italy, Spain, France and Germany occurred in the five most heavily polluted regions of the 66 regions analysed.   These five areas suffer high of nitrogen dioxide (NO2), a pollutant produced mostly by diesel vehicles. NO2 exposureis linked to lung disease, which could make people more likely to die if they contract Covid-19.  

As someone who normally starts the commute home from the most polluted street in Glasgow, air pollution is a concern of mine. Pollution levels have plummeted during lockdown but may return to normal levels post-quarantine; perhaps we could continue to keep certain meetings online? Longer-term, I know that the Responsible Futures portfolios invest in companies that are creating solutions for smarter, cleaner cities and I think the pandemic has created a further very compelling reason to pursue that goal.   

While man/woman-made air pollution may worsen the impact of the disease, Covid-19 originated in the natural world, via transmission from an animal to a human. As highlighted in an article in the New Scientist, human mining and deforestation for fuel and foodstuffs encroaches more and more on the habitats where these unknown viruses have previously been isolated. Clean water, renewable energies and good standards of nutrition are other relevant themes incorporated in our Responsible Futures portfolios. 

With a daughter who works in conservation and whose hero is David Attenborough, I often find it’s the E in the ESG room that gets most attention. However, the current health crisis has brought the S (social) considerations much more to the fore.  We receive daily updates on which businesses are looking after their staff’s income and safety and which are treating customers fairly.  Going forward, negative press may affect both the profits and the share price of some of the ne’re-do-wells long after the pandemic is over. 

Shocks like these often cause us to take stock and re-evaluate what is important to us. As a nation, we are looking to “be kind”, to think about others and be thankful for what we have. We are already seeing some of our clients actively seeking out more “conscientious” investments as a result of this. 

People are also embracing technology to allow us to interact socially and in the workplace, increasing the appeal of businesses which build new technological solutions to improve society and use resources efficiently. There are many of these included in the Responsible Futures portfolios, from online education to cyber security.   

That takes us to the G in ESG – how well is a business governed? This is where I am going to take the liberty of shining the spotlight on Waverton. We may not have a 2-hour queue to get through our doors like Sainsburys or B & Q, but the fact the business is well-run both ethically and financially means we are well placed in this crisis.  Staff are looked after emotionally and financially and encouraged to go the extra mile for clients and for each other wherever possible.  This environment brings confidence and as a result we have ideas and we get things done. This is the kind of business that will be well placed to thrive when the lockdown lifts. 

We asked the investment managers at Canaccord about how they see the pandemic affecting the portfolio. They responded that it will accelerate the trend towards businesses that can survive in a world that has change forced upon it, whether this change is caused by a health scare or by climate change. Portfolio Manager, Patrick Thomas said: 

The two major themes we see driving the economy over the coming decade (climate transition and economic growth working for a greater number of people) have come into sharper focus. Covid has not changed things because these trends were already in place, but it has accelerated them, and the disruption will be Darwinian in terms of winners and losers. 

We see the portfolios as well placed to carry out their dual purpose of attractive performance and doing good for the world, measured through the UN Sustainable Development Goals.   

We may all have felt powerless and overwhelmed at times by these strange events unfurling around us but when we get through this we will have control back and choices to make. We have witnessed how much change we can make when we act collectively and investing collectively and sustainably is also an extremely effective way of potentially making a difference. We have lived through what happens when our house of cards is knocked down and now is an excellent time to rebuild in a way that nurtures both ourselves and our planet. 

It just remains to wish you all a Happy Earth Day and to leave you with one of our tips for lockdown survival, this one is for all the home schoolers and also Earth related – Water themed educational activities from Earthwatch Europe! 

Please note that the content of this letter is for information purposes only and should not be considered as a recommendation to invest in any particular investment strategy or any individual company.

Although our physical offices are currently closed, we are business as usual from home, and available by phone and email as always. Please get in touch!  

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