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Home > Child Trust Fund > Invest for yourself and a greener planet

Invest for yourself and a greener planet

There are choices you can make to invest more ethically, such as choosing to invest in a climate-friendly fund.

When you open our Stocks and Shares ISA or Lifetime ISA, you can choose to put your money in one of two funds.

One of these funds, Global Equity, invests 100% of your money in shares in companies that meet our strict climate-friendly criterion. The other fund, Global Mixed, invests up to 35% of your money in this way, with the rest invested in lower-risk, fixed-interest assets.

How does OneFamily support the environment?

As well as reducing waste in our offices, undertaking energy-saving initiatives and using renewable energy where we can, we also offer our customers climate-friendly investment options.

Global Equity, our 100% climate-friendly fund, buys shares in companies that meet our strict climate-friendly criterion. We choose companies to invest in based on things like how much work they're doing towards reducing their impact on the environment and how ready they are for climate change.

This rewards and supports those businesses doing the right thing by the planet. It also gives other companies another reason to choose sustainable ways to run their business.

Up to 35% of our Global Mixed fund also invests in this way, with the rest of the fund used to invest in lower-risk, fixed-interest assets.

Changing the way investment works is a journey, and we view this as the first step to encouraging businesses to start working towards greener ways of operating.

How we decide which companies to invest in

When you open our Stocks and Shares ISA or Lifetime ISA and choose to invest in our Global Equity fund, your money is used to buy shares in around 500 - 600 companies. These are chosen from over 1,600 of the world’s largest firms in an index called the Morgan Stanley Capital International (MSCI) World Index.

The MSCI World Index is used as a common benchmark for global stocks and shares funds, the companies that make up this index come from a wide range of different industries.

the below chart shows the breakdown of industries that make up the MSCI World Index.

Pie chart showing breakdown to sectors in the MSCI World Index
Information technology: 20%, Healthcare: 14%, Financials: 13%, Non-essential goods and services: 11%, Manufacturers: 10%, Communication services: 9%, Essential goods and services: 8%, Materials: 4%, Utilities: 3%, Energy: 3%, Real estate (property): 3%

To reach the standards we are hoping for, each organisation is ranked on 5 different factors:

carbon-intensity-border

Carbon intensity

How much carbon emission the company is responsible for, from creating CO2 themselves to relying on a supply chain that creates CO2.

The less, the better.

brown-reserves-border

Brown Revenues

What proportion of a company’s income comes from non-climate friendly activities, like drilling and mining.

The less, the better.

fossil-fuels-border

Fossil Fuels

How much greenhouse gas emissions would result if the company used its fossil fuel reserves.

The less, the better.

green-revenues-border

Green Revenue

What percentage of the company’s overall revenue comes from “green” business activities, such as low-carbon technology and renewable energy production.

The greater, the better.

adaptation-score-border

Adaptation

Adaptation: How prepared the company is for managing their impact on climate change, by having a strategy and action plan to reduce greenhouse gas emissions.

The more focused on a greener future, the better.

For each of the factors above, we select only the companies most aligned. By selecting across different industry sectors, this gives your investment portfolio the best chance to make returns while making a positive impact on the environment.

Companies must keep striving to be sustainable too, as they are reassessed four times a year. Those who don’t continue to meet our standards may leave while those who become more aligned to the five factors might find themselves included.

Let’s take two car manufacturers as an example

Car Manufacturer A: makes electric vehicles and produces clean energy

  • Relatively low carbon intensity
  • Zero brown revenues and fossil fuel reserves
  • 100% green revenues and
  • Strong adaptation score

Car Manufacturer B: known mainly as a manufacturer of automobiles, motorcycles, and power equipment

  • Higher carbon intensity
  • Zero brown revenues and fossil fuel reserves
  • Very low proportion of green revenues
  • Relatively good adaptation score
Honda Logo
Carbon Intensity
Honda Logo
Brown Revenues
Honda Logo
Fossil Fuel Reserves
Honda Logo
Green Revenues
Honda Logo
Adaptation Score
Car Manufacturer A 56 0.00% 0 100.00% 0.729
Car Manufacturer B 83.4 0.00% 0 3.60% 0.646
Car Manufacturer A Car Manufacturer B
Carbon intensity
Carbon Intensity
56 83.4
Brown Revenues
Brown Revenues
0.00% 0.00%
Fossil Fuel Reserves
Fossil Fuel Reserves
0 0
Green Revenues
Green Revenues
100.00% 3.60%
Adaptation Score
Adaptation Score
0.729 0.646

Car Manufacturer B isn't doing too badly, and it looks like it's moving towards green revenues, but isn't thriving in a sustainable fashion like Car Manufacturer A. 100% of Car Manufacturer A’s revenues come from green business activities, while only 3.6% of Car Manufacturer B’s revenue does.

As a result, we don’t invest in Car Manufacturer B at the moment but we do invest in Car Manufacturer A.

Of course, this could all change. We reassess companies' climate credentials regularly so if Car Manufacturer A changes their approach and becomes less sustainable they could lose our investment. But Car Manufacturer B also has the option to change and could still win our investment in the future

Aligning ourselves with the United Nations Paris Accord

Our processes are designed to align us with the United Nations Paris Accord on Limiting Climate Change. Once a quarter, the selection of companies we choose to invest in are reassessed in order to align the fund with the accord’s goals:

  • Making the carbon intensity of our selection of companies invested in 70% lower than the average score of the overall 1,600+ companies
  • Making the fossil fuels/brown revenues of our selection of companies invested in 90% lower than the average of the overall 1,600+ companies
  • Making the green revenues score of our selection of companies invested in 300% higher than the average score of the overall 1,600+ companies

Keeping your money away from the really bad guys

The Ten Principles of the United Nations Global Compact asks companies to embrace and support a set of core values in the areas of human rights, labour standards, the environment and anti-corruption.

Any companies that have been found to violate these principles are excluded from the list of companies we invest in, as are companies who are involved in controversial weapons. We also won’t invest if a company’s revenues come from 10% or above on thermal coal extraction, arctic oil and gas exploration or oil sands.

We also pay close attention to the Swedish National Pension Funds’ Council on Ethics, which aims to influence companies globally to consider the environment and ethics in the way they operate.

The Council publishes a list of companies excluded based on their poor environmental and ethical behaviours.

Why does it matter to us?

At OneFamily we believe that finance isn’t just personal. Every decision we make affects the people we care about most, our communities and the world. That’s why we believe in creating products which do good.

It’s not just our climate-focused investment funds that share this ethos, as a company we are focused on supporting individuals and communities. Because we are owned by our customers, we are free to focus on reinvesting our profits for their benefit, not shareholders.

We provide Young Person's Education Grants and we've created meaningful, long-term partnerships with charities that are making a positive difference locally.

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