Harry and Meghan enter the ethical investing industry

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News that Prince Harry and Meghan, Duchess of Sussex, have a new role as ‘impact agents’ within ethical fintech company Ethic comes at a delicate time. Just a day after the announcement, data revealed that U.S. investors are the least interested in ethical investing in the world.

Last year, only 64% of U.S. investors used ESG (environmental, social and governance) factors to make an investment decision, according to a survey conducted by Royal Bank of Canada Global Asset Management (RBC GAM).

By comparison, more than three quarters of Asian investors and 94% of Europeans have taken these ethical issues into account when investing their money. And as their rates rise, the percentage of investors taking ESG into account in the United States has steadily declined over the past three years.

Donald Trump made many ESG investors lose faith when he banned pension and pension plans from taking ESG factors into account when selecting investments, a decision that is only now contested. “There has been a big setback under the Trump administration,” said Melanie Adams, head of corporate governance and responsible investment at RBC GMA.

But, regardless of Trump, the data shows that a quarter of U.S. investors expect ESG portfolios to underperform their non-ESG counterparts. Ethical investments, they believe, would make less money. Anyone who invests for maximum profit should therefore invest their money in non-ESG stocks like oil and gas.

None of this bodes well for Harry and Meghan, who not only invested in Ethic earlier this year, but also have their own managed portfolio with the New York-based startup, where, according to its marketing materials, ” investing everything is a sustainable investment “.

Harry and Meghan’s wallet size at Ethic is unknown, but the average count is believed to be there about $ 2 million, and the average investment during his Series B funding round in March was $ 4.1 million. The company manages a total of $ 1.3 billion between less than 1,000 clients. (Ethic did not respond to requests to verify these numbers.)

Ethic invests according to the preferences of each client. Among the 19 issues that new investors choose when registering include things such as ‘animal welfare’, ‘climate change’, ‘LGBTQ justice’ and ‘business diversity and inclusion’.

A spokesperson for Ethic said such preferences define every customer’s wallet. “We empower our clients to choose the environmental, social and governance issues that are most important to them, then help them create personalized portfolios based on their preferences, not ours,” said a spokesperson. . the Telegraph.

Many of these issues align with Harry and Meghan’s goals. In one common opinion piece for The Washington Post, the Duke and activist Reinhold Mangundu opposed plans to drill for oil and gas in the Okavango River Basin. “We believe it would plunder the ecosystem for potential profit,” they wrote.

However, these issues are out of step with the wider investment community. Most ESG-related investments are made in that order to tackle corruption, cybersecurity and climate change, the latter losing one spot since the same RBC GAM survey conducted a year ago.

The United States had the highest number of respondents saying climate change was “intangible” in their decisions. LGBTQ justice has not been classified.

What will Harry and Meghan do as impact agents?

Ethic has not said what exactly Harry and Meghan will do as impact agents. However, in a press release, the company said “it wants to shed light on how we can all impact the causes that affect our communities.”

This involves a sort of ambassadorial role, which could promote the idea of ​​investing in ESG to an increasingly skeptical audience in the United States. change the agenda.

It is not only the investment community that needs to be convinced, but all those who have the money to invest. In a meeting with the New York Times

NYT
In announcing his intention to join Ethic, Harry said he wanted “the younger generation to vote with their dollars and their books.”

However, things could start to change already, regardless of Harry and Meghan’s new job. “I think we’re starting to see more and more recognition in the public,” Adams says. “We sent out the survey last spring, so it would be interesting to monitor over the next few years how the survey is going. “

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