With the recent devastating wildfires ravaging Los Angeles, we’re left with a sobering reminder of how destructive extreme weather has become.
In 2024, Brazil suffered its worst drought on record, affecting nearly 60% of the country.
Eastern Spain was drenched by a year’s worth of rain in just eight hours, and the United Arab Emirates saw a similar deluge in under 24.
Meanwhile, heatwaves in parts of Asia reached levels that scientists say were 45 times more likely due to human-driven warming.
The Philippines endured six typhoons in the span of a single month – storms estimated to be 25% more likely because of climate change – displacing over 13 million people.
Each event underscores a growing reality – as global temperatures rise, extreme weather is becoming both more frequent and more severe.
2024 was officially the warmest year on record.
Scientists agree the main driver behind last year’s record heat was human-induced climate change, though natural factors like El Niño also played a part.
However, the growing scientific consensus offers a roadmap for potential solutions.
Renewables, carbon capture, and ecosystem restoration can help offset emissions and protect against climate shocks. Forests, peatlands, and coastal wetlands can lock away large amounts of carbon, while also acting as natural buffers against storms and flooding.
Climate-focused investment solutions are becoming more important to investors. Not only do they aim to shelter portfolios from the negative effects of global warming, but they also help support the shift to a more resilient, sustainable economy.
Here are two fund ideas that put sustainability at the heart of their strategy.
This article isn’t personal advice. Remember, investments can rise and fall in value, so you could get back less than you invest. Past performance isn’t a guide to the future. If you’re not sure if an investment’s right for you, ask for financial advice.
Investing in these 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.
For more details on each fund and its risks and charges, use the links to their factsheets and key investor information.
FP WHEB Sustainability Impact
The team aim to identify longer-term themes based on critical environmental and social challenges facing society, and then invest in companies providing solutions to these challenges.
The nine sustainable investment themes range from resource efficiency and sustainable transport to education and wellbeing.
The fund managers are committed to delivering measurable impact alongside financial returns. They report on the real-world outcomes of their investments, providing transparency into how the companies in the portfolio are addressing critical sustainability challenges.
For example, in 2023, the fund avoided 211 tonnes CO2e emissions – equivalent to the electricity consumption of 106 average European homes for one year, and saving £7,072 in avoided carbon costs. Additionally, investments supported access to clean water, improved healthcare solutions, and renewable energy generation. Their detailed impact reporting allows investors to see the real-life benefits of their investments.
The managers’ approach means the portfolio looks very different to the broader global stock market, so we expect it to perform differently too.
The fund's focus towards small and medium-sized companies adds risk, as does its flexibility to invest in emerging markets.
Liontrust SF Corporate Bond
The Liontrust SF Corporate Bond fund is managed by an experienced team that’s passionate about sustainability.
Managers Kenny Watson, Aitken Ross, Jack Willis and Connor Godsell aim to find bonds issued by high-quality companies whose core products or services make a positive contribution to society or the environment.
This sustainability analysis is undertaken for every bond issuer in the fund.
The managers believe investing in sustainable companies provides greater return potential, and less risk, than other companies.
The managers apply revenue-based exclusions, in controversial areas like tobacco, coal and armaments. So, it won’t invest in bonds issued by companies making a lot of their revenue from these areas.
The fund's exposure to utilities means its carbon intensity is relatively high, and this adds risk.
The managers are prepared to invest in companies that might have a higher carbon intensity today if they’re supporting the transition to a net-zero economy.
The fund’s sustainable tilt means the fund can perform differently to peers. It can invest in emerging market bonds and use derivatives, both of which add risk.
If you want to learn more about investing responsibly, explore our Responsible Investment hub.
