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How your investment decisions help fight climate change

Our ISAs and Lifetime ISAs are invested either entirely or partly in climate-friendly funds. But what difference does this actually make?

For some time, investors have been voting with their money and choosing more climate-friendly funds. In fact, according to the Saltus Wealth Index, an incredible 80% of young investors (those aged 18 – 24) have chosen to put at least some of their money in ESG stocks.

ESG stands for Environmental, Social and Governance. These are funds that invest in companies with a lower carbon footprint compared to the rest of their industry, and who are less active in damaging activities, such as fracking or building weapons.

For simplicity, we call this “climate-friendly” at OneFamily.

The more money that is invested in ESG, or climate-friendly, funds, the more companies sit up and listen. It’s becoming more and more important for companies to attract investors who care about the environment.

Our Stocks and Shares ISA and Lifetime ISA both come with the option to invest in a climate-friendly fund.

As we regularly review which companies should get our investment, our climate-friendly funds incentivise companies to keep working towards reducing the amount of damage they're doing to the environment.

How has investing in OneFamily’s climate-friendly funds made a difference?

Our Global Equity fund buys shares in companies that meet our strict climate-friendly criterion. The companies are measured on things like how much work they're doing to reduce their environmental impact – those with the most positive climate scores win more of our investment.

If your money is in our Global Mixed fund, up to 35% of it will also be invested this way. The rest is invested in lower-risk, fixed-interest assets.

You’ve openly invested in companies producing less carbon dioxide equivalent

On average from April to June 2022, the work carried out by the companies that OneFamily’s climate-friendly portfolio invest in produced 61.5% less carbon dioxide equivalent (CO2e) than those in the MSCI World Index.

Those companies know that their efforts to reduce CO2e emissions are resulting in more people buying their shares. Those who aren’t in our portfolio know they’re missing out because of their higher carbon emissions.

You’ve supported us in filtering out the companies with the biggest fossil fuel reserves

Companies that the MSCI World Index invest in had 157 tonnes of fossil fuel reserves in June 2022. OneFamily’s climate-friendly fund, on the other hand, had only 17 tonnes of fossil fuel reserves between them.

That’s 89% less!

You’ve supported more green revenue and less brown revenue activities

In June 2022, companies in OneFamily’s climate-friendly portfolio undertook an incredible 300% more “green” business activities than those in the MSCI World Index’s portfolio. That’s things that benefit the environment while making the company money, such as waste and pollution control.

Those companies also undertook 90% less “brown” business activities between them. Brown revenues are ways of making money that harm the environment, like extracting fossil fuels.

You’ve helped give companies more reason to prioritise the environment

Companies want funds like ours to invest in them, but they have to meet our strict rules or we won’t touch them. We’re seeing more and more companies working towards meeting our standards.

By choosing a OneFamily ISA or Lifetime ISA, you’re helping us to hold companies accountable for damage they’re doing to the environment. If they start to produce more CO2e then they’re at risk of us removing them from our portfolio.

At the same time, we’re keeping an eye on those that are cleaning up their acts and add companies to our portfolio when their activities become more carbon efficient.

So, you’re helping to persuade them to rely more on green revenues, such as low carbon technology and “clean” energy production, and less on fossil fuel reserves and brown revenues, like drilling and mining.

How to invest in a climate-friendly fund

If you don’t already, you can use your ISA allowance to support companies that are less environmentally damaging. Take a look at our Stocks and Shares ISA or, if you’re saving for your first home or for retirement, you might consider opening a Lifetime ISA.

Both of these ISAs come with the option to invest in a climate-friendly fund. Global Equity invests only in climate-friendly options, while Global Mixed invests up to 35% in climate-friendly shares and the remaining 65% or so is invested in fixed interest rate assets and bonds, which makes it a less risky option.

By choosing a climate-friendly fund, you’re adding your voice to the growing group of people using the power of their investments to incentivise companies to keep fighting climate change.

Our ISA and Lifetime ISA both invest in stocks and shares. While this type of investment has good potential to grow, please be aware that the value of your investments could also go down.

Find out more about our green credentials.