Expats consider investments that offer profits with a purpose

Tens of thousands of expats in Europe have been affected by wildfires across Europe over the last week triggered by a heatwave. Devastating blazes have swept across huge areas of perennially popular expat destinations in Spain, Portugal, Croatia, the Czech Republic and France, amongst other countries. Spanish authorities say that around 20 wildfires are still raging in different parts of the country from the south to Galicia in the far northwest. In France, the situation deteriorated in the southwestern Gironde region where firefighters were fighting to control forest blazes that have devoured nearly 11,000 hectares (27,000 acres) since Tuesday. What’s particularly alarming, say experts is the rise of dangerous humid-heat temperatures. It was thought that the fatal 35C wet-bulb threshold – the point at which the human body can’t cool itself down and even healthy people with unlimited shade and water will die of heatstroke – almost never occurred in the current climate. But as a 2020 study reveals, humid heat above 35C has already been happening — from the Persian Gulf and the Red Sea to Pakistan, India, Australia, Venezuela and both Mexican coasts. Wet-bulb temperatures above 31 degrees C have turned up in dozens of places across tropical South and Southeast Asia, China, West Africa, southern Europe, and the Americas.

Heatwaves

Data shows heatwaves have been on the rise in recent years, yet governments around the world are either unwilling or unable to funnel the resources necessary to try and tackle the problem head-on. As such, many leaders are calling on the financial advisory sector to more actively promote the benefits of sustainable, impactful investing. “Trillions of dollars are needed. This is why it is now critical that private money is unlocked and mobilised in the battle to mitigate the worst effects of human-created climate change,” says Nigel Green, deVere Group CEO. “For this to happen, all sectors within the financial industry need to step-up, including financial advisories, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks and auditors. If we fail on this, the level of finance will not be available, nor at the pace necessary, to halt the catastrophic effects of global warming.”

ESG investing

Previously, ESG (environmental, social governance) investments were often considered a ‘quirk’ or ‘nice to have.’ But now there’s a growing consensus amongst analysts that almost everyone should have ESG exposure in their investment portfolios. Here are four reasons why:

1. They typically deliver a legitimate diversification tool – which is how investors can seize opportunities and mitigate risk, especially during periods of higher volatility.

2. Funds investing in entities with robust ESG credentials have outperformed their benchmarks over recent years. From a risk management point of view, including these companies in your portfolio is, clearly, a sensible decision to take.

3. ESG represents a revolution of investment strategy itself. A seismic shift has occurred in corporate behaviour. How firms approach ESG factors and the value they place on them compared to other considerations has already changed forever.  The ESG themes are already embedded in the global economy as this is only set to grow in the years to come – and, of course, investors should embrace the concept of having early advantage.

4. The last two years of a pandemic have underscored how we have a moral obligation to back and fund entities that support the wellbeing of the planet and society.

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