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Responsible consumption

Investing in responsible consumption

Climate change is raising serious questions about the sustainability of our lifestyles. As a consumer, you can support sustainable companies with your everyday purchases. In turn, responsible companies will be well-placed to attract investors who are looking for both financial return and positive impact. Our new report looks at why responsible consumption is on the rise and which sectors it will disrupt.

The consumer goods sector has been an engine for economic growth in many parts of the world and makes up a huge proportion of global trade. The sector's size comes at a cost, though. 60% of global greenhouse gas emissions and 80% of freshwater usage originate from consumer products. The World Wildlife Fund described this as a “looming ecological credit crunch.”

Pushing our ecosystems to the brink

The way we produce and consume goods is exhausting natural resources. Our inefficient supply chains often end up polluting the environment. It's estimated that there will be more plastic in the world's oceans than fish by the year 2050. The system also builds in wasteful practices: every year, we throw away around one third of all food produced globally.

Recognition of these facts has led to a new focus on responsible consumption. Goal 12 of the United Nations Sustainable Development Goals (SDGs) seeks to ensure sustainable consumption and production1. Achieving this goal would do more than save the planet – it could also create vast new economic benefits. From second hand fashion to plant-based proteins, a more sustainable consumer economy could unlock USD 4.5 trillion in new opportunities every year.

New opportunities for investors

These trends will leave many consumer sectors ripe for disruption. Investors need to consider how to use their wealth more sustainably, both for the good of the environment and for the long-term health of their portfolios.

Marisa Drew - CEO Impact Advisory and Finance Department Credit Suisse

Marisa Drew

CEO Impact Advisory and Finance Department Credit Suisse

The challenge is to identify which companies are acting in anticipation of regulatory and consumer changes. This means evaluating how companies come to grips with sustainability.

Business models that cater to responsible consumers will be better placed to face disruption. Investors in these companies will be better able to position their portfolios for the long-term, and to do well by doing good.

As part-owners, investors are important stakeholders in a company. They drive the stock price upon which management incentives are often based and determine the price and ease of access to capital.

Perhaps unsurprisingly, given the proliferation of policy interventions and consumer interest in this space, investors are expressing a greater interest in sustainable investing. From 2012 to 2018, reported assets under management in sustainable investment strategies have risen from USD 11 trillion to USD 31 trillion, as stated by the Global Sustainable Investment Alliance. Shareholder activism, in particular, can play an important role in pushing companies to adopt more sustainable policies. According to Activist Insight, the number of shareholder campaigns related to environmental, social, and governance themes has increased twenty-fold since 2007. Investing in this area is an opportunity for our time – and the world to come.

Investments can go down as well as up and your capital may be at risk

Contact us today to learn more about investment opportunities in this area

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