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With World Environment Day on Sunday, we take a look at 3 investment trust ideas that could help protect the planet.
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.
Sunday was the United Nations’ World Environment Day, a day for collective, transformative action on a global scale to celebrate, protect and restore our planet. Marked for nearly 50 years, the day is the largest global collaboration for environmental action.
The climate is warming too quickly for people and nature to adapt. Pressures like habitat loss mean that an estimated 1 million species are threatened with extinction. And pollution continues to poison our air, land and water. These planetary emergencies make this day even more significant.
An easy way investors can help preserve our natural environment for future generations is to invest in sustainable investment trusts.
Historically, investors have had a small selection of investment trusts to choose from that have an environmental objective. These would often focus on a renewable energy sector that’s otherwise inaccessible.
However, over the last decade, assets in ESG investment trusts have increased 55-fold. There are now lots of different areas of specialism to suit the growing number of investors motivated by more than just financial returns.
Here’s a look at three investment trusts that are investing to protect and restore our planet.
This article isn’t personal advice. If you’re not sure whether an investment is right for you, ask for financial advice. All investments can rise and fall in value, so you could get back less than you invest.
Investment trusts can sometimes invest in specialist areas like smaller companies, derivatives, and unlisted (private) companies which are higher risk. Investors should only invest in them if they have the time and knowledge to carefully select and monitor them, and as always, they should be held as part of a diversified portfolio.
For more details on each investment trust and its risks, please see the links to their factsheets and key information documents below.
The UK’s largest environmental investment trust, Impax Environmental Markets, is committed to promoting prosperity, while protecting the planet.
The trust invests in small and medium-sized companies that have over 50% of their revenue generated by the sale of products and services in environmental markets. This includes sales in energy efficiency, renewable energy, water, waste and sustainable food and agriculture markets.
The trust has a real-world impact. In 2020, a £10 million investment into the trust would’ve:
One of the trust’s holdings, NIBE, manufactures a wide range of eco-friendly, energy-efficient solutions to decarbonise the way we heat our homes. Based on the cut in emissions from the type of heating systems NIBE’s heat pumps replaced in 2019 alone, the reduction was 228,000 tonnes of CO2 for the year. This is roughly the same amount as the total emissions from all buses, mopeds and motorbikes in the whole of Sweden.
JLEN invests in a diversified portfolio of environmental infrastructure projects. The trust aims to pay investors a sustainable, progressive dividend every quarter, while sheltering the capital value of its portfolio.
The trust has three key objectives: to promote the efficient use of resources, to develop positive relationships with the communities it works in, and to ensure effective, ethical governance across the portfolio.
One of its investments is with the East London Waste Authority, a multi-site project that processes waste from four London Boroughs – Redbridge, Barking and Dagenham, Havering and Newham. The waste is biologically treated to produce solid recoverable fuel and other recyclables. The project successfully diverts around 96% of all waste received from landfill.
Recycling our waste is vital in reducing our environmental footprint. Not only do landfills destroy biodiversity and natural habitats, the decomposition of organic mass in landfills is a major source of methane gas emissions. This is why waste and wastewater process is a key theme for JLEN Environmental Assets Group.
TRIG is a London-listed investment trust. Its purpose is to generate sustainable returns from a diversified portfolio of renewables infrastructure that contribute towards a net-zero carbon future.
By investing in renewables, TRIG is helping to provide clean energy across the UK and Europe, through the construction funding of new greenfield infrastructure. The clean energy generated by the portfolio in 2021 was capable of powering the equivalent of 1.7 million homes for a year.
Limiting the impact of climate change is core to what they do. At their East Anglia One offshore wind farm, a pilot project has been launched to help reduce carbon emissions. Using waste vegetable oil to help power crew transfer vessels, is predicted to reduce carbon emissions by 30%.
TRIG also recognises nature loss as a systemic risk for the global economy. They’ve committed to preserve and improve the biodiversity at their sites and the surrounding ecosystems. At Garreg Lwyd, their onshore wind farm in Wales, the onsite ponds are home to a range of freshwater plant species, including protected species like the great crested newt. They have committed to proactive ecological monitoring and remedial works on the ecosystem.
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Our fund research is for investors who understand the risks of investing and that investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
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