Investing For A Better Tomorrow: Sustainable Investing

Thank you for your trust in the 2050 Investment Advisory Group, the name, formerly the “Cheng Advisory Group”. My over 30 years working in the investment industry and in government in the areas of finance and economics has made me appreciate what is important in life and in investing. As a discretionary portfolio manager of my client’s money for over 20 years I understand your needs. Today my focus for you as your advisor is on global and sustainable investing.

In 2019, I was so proud to become a grandfather. The first time I saw Saige, I promised her that grandpa would try to make the world a better place for her and her generation. Today, the world is facing a crisis with climate change. Global conflicts still endure. And, we are still addressing a global pandemic. I changed my business name to 2050 Investment Advisory Group as a commitment to my granddaughter to do help do my part to bring the global carbon emissions to “Net Zero” by 2050.

Climate change is probably the most consequential event in human history. If not addressed it will have catastrophic impacts to the social, economic, political well-being of all humanity. To mitigate the damages, we need to bring the global carbon emissions from 50 billion tons a year to “Net Zero” by the year of 2050.

Today, 2050 Investment Advisory Group is all about building a better tomorrow for our clients, their loved ones, and for the future of our planet. All doing what we can, while making great returns for our clients. To build a better tomorrow, we must take responsibility in how and what we invest while still making money.

To be clear, sustainable investing is not a compromise on returns. On the contrary, following a sustainable investing strategy should increase returns in our evolving new world order. Investing responsibly is a long-term investment strategy which requires an understanding of the risks and the impacts of climate change, the crisis of global conflicts, innovations, and technology on people’s lives and their investments. It is all about investing in great businesses over multiple business cycles with complimentary assets to diversify the overall risks. In fact, over 60% of all institutional investors are now adopting a sustainable investment strategy based on established global goals for sustainable development.

The 17 Sustainable Development Goals (SDGs) are the building blocks of a sustainable future. Sustainability is the only road for the future of humanity and our planet. The actions we take in one area will affect outcomes in others. Ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and stimulate economic growth. This needs to occur at the same time as we protect our oceans, forests and ensure biodiversity.

In many ways we are in the first phase of a new “Industrial Revolution” with the global transition to “Net Zero”. The transition will cost between $100 trillion to $150 trillion (yes, trillion) over the next three decades. This is the cost of the transformation of how we live and, in turn, invest. We cannot expect a different result when we are still doing the same things. But it is not simply about “carbon vs non-carbons” or “us against them”. These mindsets are too simplistic and polarizing. Instead of focusing only on consumption and short-term solutions, we need to focus on building a sustainable future. With a new mindset and taking appropriate actions, we will be able to bring down the carbon omissions to zero by 2050.

To meet the sustainable development goals, 2050 Investment Advisory Group integrates “Environmental, Social & Governance” factors (“ESG”) into our investment decision-making process. “Environmental” is all about conservation of the natural world, issues such as, climate change and carbon emissions, air and water pollution, biodiversity, energy efficiency, water scarcity. “Social” is all about consideration of people & relationships, such data protection and privacy, gender and diversity, human rights, and labor standards.

“Governance” is all about ensuring good governance including dealing with accountability of companies and governments, such as board composition, executive compensation, and whistle-blowing.

In pursuing a sustainable future, we use a balanced approach at the 2050 Investment Advisory Group in selecting the methods of investing, based on our team’s understanding of global issues and prevailing market conditions. Each method has its own characteristics, strengths and advantages. Some examples of investing methods we use include:

• “Exclusionary Screening” method can remove companies for consideration for investment where the business practices of the company conflicts with your values. For example, companies in the tobacco or in defense industries or supplying them.

• “Best-in-Class” method selects companies that are actively embracing the transformation, instead of excluding the whole sector, such as the energy sector.

• “ESG Integration” method is simply including ESG criteria alongside traditional financial analysis to pursue a better risk analysis to enhance a better performance.

• “Thematic Investing” focuses on a single ESG related area such as clean energy, or women in leadership.

• “Impact Investing” focuses on particular projects designed to achieve specific goals, such as affordable housing and other social agendas.

• “Active Ownership” or “Corporate Engagement” methods directly engages with companies on ESG issues, such as using proxy votes, or participating in shareholder meetings.

I am confident we can archive “Net Zero” by 2050 when we change our mindset. Until 1954, people believed that it was impossible for a human to run a mile in less than 4 minutes. When Roger Bannister ran the mile in 3.594 minutes on May 6, 1954, he not only broke the world record but arguably he changed people’s mindset - from the impossible to the possible. Within days, other runners ran a mile in less than 4 minutes. Roger Bannister’s world record was broken in just 46 days!

We can truly build a more sustainable world when we take responsibility for our investments. When we change our mindset and see the impacts from the perspective of the environment, social, and governance. You can help yourself and the planet by investing with 2050 Investment Advisory Group.

This e-newsletter has been prepared by Francis Cheng and expresses the opinions of the author and not necessarily those of Raymond James Ltd. (RJL). Statistics, factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. This newsletter is intended for distribution only in those jurisdictions where RJL and the author are registered. This provides links to other Internet sites for the convenience of users. Raymond James Ltd. is not responsible for the availability or content of these external sites, nor does Raymond James Ltd endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same privacy policy which Raymond James Ltd adheres to. Securities-related products and services are offered through Raymond James Ltd., member-Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member-Canadian Investor Protection Fund.