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A simple solution for investors concerned by climate change

There’s an easy way to invest in companies involved in reducing the impact of climate change.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Climate change is the environmental issue closest to most investors' hearts according to a survey of HL clients.

It's easy to see why.

Carbon dioxide levels have reached a three million year high, the last five years have been the hottest since records began, and glaciers are melting at an alarming rate - we’ve lost 9 trillion tonnes of ice in half a century and water levels are on the rise.

As the problems faced by our planet become increasingly clear, people are taking action. 82% of people we surveyed recycle, 78% turn lights off around the house and 49% avoid single-use plastics altogether.

But only four out of 10 people know it's also possible to invest in a way that benefits the environment and society. You could avoid investing in companies that do harm, or you could invest in those trying to make the world a better place.

The right climate to make money

Investors who want to limit their exposure to harmful companies could consider the Legal & General Future World Climate Change Equity Factors Index. The fund aims to gain exposure to upsides climate change may bring to some companies, while reducing exposure to those involved with the fossil fuel industry or who emit higher than usual levels of CO2.

It invests in more than 1,900 companies across the globe and aims to track the FTSE All-World ex CW Climate Balanced Factor Index.

Controversial weapons

The ‘ex CW’ in the index’s name indicates it excludes companies that make controversial weapons. These include cluster munitions, anti-personnel mines, chemical or biological weapons.

The index gives greater weight to companies that help address the impacts of climate change, resource depletion and environmental erosion. Exposure is reduced to companies that produce fossil fuels or emit high levels of CO2. The index also gives greater weight to companies that score well on four factors: value, quality, low volatility and small size.

Legal & General are experienced tracker fund managers but investments in smaller companies and emerging markets, combined with the managers' flexibility to use derivatives, add risk. The index tracked by the fund looks very different to the broader global stock market so we'd expect it to perform differently too.

The fund's ongoing charge is 0.30%. The HL platform charge (maximum 0.45% p.a.) also applies.

Annual percentage growth
Aug 2014 -
Aug 2015
Aug 2015 -
Aug 2016
Aug 2016 -
Aug 2017
Aug 2017 -
Aug 2018
Aug 2018 -
Aug 2019
Legal & General Future World Climate Change Equity Factors Index n/a* n/a* n/a* n/a* 6.6%
FTSE All-World ex CW Climate Balanced Factor Index 3.1% 29.2% 17.9% 9.7% 7.7%
FTSE All-World 1.9% 26.7% 19.7% 10.9% 6.9%

Past performance is not a guide to the future. Source: Lipper IM to 30/08/2019.

*n/a – data for this time period isn’t available.

More on this fund, including charges

Key Investor Information

To see more of our latest investment ideas, see our sustainable approaches series. If you want to learn more about the ways you can put your principles into practice through the way you invest, see our Guide to responsible investing.

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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