ESG Insights: Trends, Analysis & Our Featured Chart #9

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For financial professionals only

This week there's a potentially big economic boost from the net zero transition in the UK, setbacks to the green transition in the EU elections, along with increased tariffs and declining sales for electric vehicles (EVs).

The key takeaways:

  • Going net zero could boost the UK economy – according to a report from Energy UK (based on a report from Oxford Economics) the UK economy could be increased by £240bn by 2050, equivalent to the entire UK manufacturing sector.

  • Green seats on the decline – Green parties lose seats in the EU elections, but the parties that supported the EU Green Deal still maintain a majority. Overall, the bloc's climate ambitions are still in place, though it's expected that emissions will fall at a slower pace than previously anticipated.

  • EU cracking down on China – the EU is set to impose hefty tariffs of up to 48% on EVs shipped from China next month. 

  • EVs are losing popularity – the Bloomberg NEF EV Outlook highlights declining sales of new EVs.

Featured chart

Chart showing Different Ethical Restrictions Impact The Global Equity Market

Source: MSCI and Sarasin, as at 31st December 2023

In this chart you can see how different ethical restrictions impact the global equity market (MSCI All Countries World Index as at 31st December 2023). For example, excluding all companies involved in adult entertainment with zero revenue tolerance excludes 3.9% of the index. If up to 5% revenue is tolerated, none are excluded. Applying the strictest zero revenue tolerance across all areas would exclude about 23% of the global market.

Why’s this worth sharing?

The chart shows ethical investing excluding certain segments of the global equity market. The extent of these exclusions depends on the areas you want to avoid and the strictness of revenue criteria. This is important when it comes to understanding how your portfolio differs from the broader market and its impact on risk and return.

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.  

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