Earth Overshoot Day marks the point each year when humanity’s demand on nature exceeds what the planet can regenerate within that year.
Calculated by the Global Footprint Network, this year it falls on 30 July. Since the 1970s, Earth Overshoot Day has generally moved earlier and earlier in the calendar.
Overshoot days are calculated for individual countries too. If the whole planet consumed resources at the same rate as we do in the UK, overshoot would occur on 22 May. Qatar has the earliest Overshoot Day on 4 February.
This is all a reminder of how unsustainable our consumption patterns are, and the strain it’s putting on Earth’s ecosystems.
This article is for information only and not personal financial advice. Investing can help your money grow, but the value of investments can rise and fall, so you could get back less than you put in. Investing is for the long term, typically 5 years or more.
If you’re not sure investing is right for you, a financial adviser can help.
What does this mean for investors?
For investors, pressures on natural resources can create both risks and opportunities as governments, consumers and businesses respond to environmental challenges.
Earth Overshoot Day could be a great time to review your portfolio.
If you invest in shares consider how each company you invest in is preparing for a more sustainable future. Checking their websites and annual reports is a great way to gauge progress.
If you invest in active funds, you should make sure they’re considering the sustainability credentials of the companies they invest in.
Some funds go even further, excluding companies considered to have the greatest negative impacts on the environment. Or by focusing on businesses and assets linked to environmental solutions. Below, we look at two funds taking very different approaches.
Investing in funds is not right for everyone. Investors should invest only 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 that any new investment forms part of a long-term diversified portfolio.
For more details on each fund, its charges, and specific risks, see the links to their factsheets and key investor information.
Aegon Ethical Equity
Audrey Ryan has managed Aegon Ethical Equity for more than 25 years. She aims to identify and understand the key environmental, social and governance risks facing each company, industry and sector she invests in. Ryan believes that companies demonstrating strong governance and environmental practices are better positioned to deliver attractive long-term returns for investors.
The fund applies a strict set of ethical exclusions. It will not invest in companies involved in activities deemed unethical, including tobacco and alcohol production, munitions manufacturing and banks with significant exposure to third-world debt.
It will also avoid businesses whose activities contribute to some of the environmental pressures highlighted by Earth Overshoot Day.
This includes companies involved in coal mining and oil and gas exploration and production, firms with serious pollution convictions, businesses that breach internationally recognised biodiversity standards, and companies in energy-intensive industries that are not taking meaningful steps to address climate change and hazardous chemical risks.
Investors should note the fund invests in smaller companies, which adds risk.
Liontrust SF Corporate Bond
Liontrust SF Corporate Bond invests mostly in sterling-denominated investment grade corporate bonds issued by companies that make a positive contribution towards sustainable development for people or planet.
The bonds it invests in can broadly be split into three buckets – greater safety and resilience, better resource efficiency and improved health.
Within these buckets, there are various sub-themes, like ‘increasing electricity generation from renewable sources’, ‘delivering a circular materials economy’, and ‘enabling healthier lifestyles’.
Current investments include bonds issued by Spanish utility company Iberdrola. It’s involved in the generation, distribution, trading, and marketing of electricity, and is one of the world’s leading investors in the energy transition.
The company is investing €58bn up to 2028 to support electrification, energy security, employment and progress towards net zero emissions. This includes €36bn earmarked for electricity networks across the UK, the US, Brazil and Spain, helping modernise grids to meet growing demand.
Alongside its focus on companies contributing to sustainable development, the fund applies a range of exclusions.
It does not invest in companies deriving significant revenues from the extraction or production of coal, oil and natural gas, or from coal-fired power generation.
The fund also excludes businesses involved in illegal logging, the destruction of primary forests, and activities linked to ozone-depleting substances. Other exclusions include traditional ‘sin stocks’ like those with significant revenues from tobacco, gambling and adult entertainment.
The managers’ flexibility to invest in derivatives and high yield bonds adds risk.
