016 SUSTAINABLE INVESTING. INVESTING THAT MATCHES YOUR VALUES AND HAS A POSITIVE IMPACT.

Screen out companies that don’t match your values and invest in companies that have a positive impact.

If you would like to consider impact investing, please contact abi@lchwealth.co.uk to arrange a chat.

Louisiana Salge is Head of Sustainability at EQ Investors. EQ Investors are a discretionary fund manager focused on sustainable and impact investing. In this episode, Louisiana talks about matching your values with your investments, the real-life impact your investments can have, and how to start investing with companies that make a difference.

https://www.ask-the-boss.co.uk/heather-darnell

Lisa Conway-Hughes is a Chartered Financial Advisor, a Fellow of the Personal Finance Society and is founder of LCH/Wealth.

Book a one-to-one Financial Diagnosis with LCH/Wealth here:
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Lisa regularly posts financial information, education and updates on her hugely popular Instagram account:
https://www.instagram.com/misslollymoney

This content is to be used for information and educational purposes only and nothing contained in it is or is intended to be construed as individual financial advice. Financial advice must only be given on an individual basis. If you require legal advice, financial advice or any other expert assistance, you should seek the services of a competent and qualified professional.

If you would like to chat about financial advice please get in touch with abi@lchwealth.co.uk who will arrange a meeting with the right person for you at LCH/Wealth.

Show Transcript

Lisa Conway-Hughes: Welcome to today’s podcast. Today my guest is Louisiana Salge from EQ Investors, and we’re talking all about investing with integrity. Louisiana is Head of Sustainability at EQ amongst lots of other things. But I wanted to talk to you today about stewardship and her Positive Impact Portfolio. So welcome to today’s show.

Louisiana Salge: Lovely to be here.

Lisa Conway-Hughes: So I think when I first bring up ethical investing or ESG with clients, they know what it means, but they definitely don’t know that this is sort of a sliding scale of how ethical you can be. How would you describe it?

Louisiana Salge: Yeah, I mean, we often think about it as a spectrum. And the further you go along the spectrum, you could think about it as getting more “darker green.” But it doesn’t mean that the darker green is necessarily the best. It depends on your preferences and how far you want to go. The way that I would differentiate between the different things is what you want to screen in and screen out — what you want to invest in and what you want to avoid.

And really, the first kind of segment, if you think about sustainable investing in general as the umbrella term, would be values-based or ethical screening, where you just get rid of some harmful things — you know, the classics: tobacco, maybe fossil fuels, if you think that’s not for you.

Lisa Conway-Hughes: For lots of people, exactly.

Louisiana Salge: It’s not very investable actually, but some people are very particular about this, which makes sense. So that’s the first step. Then you start to think about what positive things you might want to align your money with. That can be quite personal as well. But we at EQ use an external framework because I don’t want to impose my own values on clients.

So what we then do is look at, for example, the UN Sustainable Development Goals, which is a globally agreed framework of the 17 most pressing issues that need tackling — social and environmental. We try to find businesses that provide solutions to tackle these issues, which for us then become positive impact investments, at the far side of the spectrum.

And in between that, there are different shades of green.

Lisa Conway-Hughes: So let me give you some examples, because I think for a lot of listeners this will be the first time they’ve come across it. I’ve just picked up the EQ Positive Impact Report. If you are a Balanced Plus client and you’d invested £100,000, then over the last 12 months you would have reduced 48 tonnes of carbon emissions — the equivalent of taking ten cars off the road — recycled two households’ worth of waste, treated eight people, made 273 medical interventions, and generated 83 households’ worth of renewable electricity. The list goes on — and I haven’t even had a cup of coffee yet!

So I think it’s nice to actually see your money have a positive outcome that you can calculate.

Louisiana Salge: Yeah, absolutely. How do we calculate this? It’s quite complicated, but not in logic — just in the amount of work. What we do is make sure that when we say we invest in positive impact companies, there’s a logic behind it, and we show our clients that impact is actually delivered. Otherwise, you get into greenwashing territory, which basically means you’re claiming a positive impact without showing proof.

The way we do it is this: as an investor, you’re a shareholder — even a tiny one. You’re a small part-owner of a business. So the impacts of those businesses can be attributed proportionally to you. For example, if a wind turbine manufacturer builds 1,000 turbines and you own 1% of the business, you can attribute 1% of that positive impact to your investment.

That’s exactly what you’re seeing on the Impact Report, which all of your clients can access if they invest with us.

Lisa Conway-Hughes: Yeah, I think it’s very rewarding to see that. Does there need to be a financial lag between investing in a green way versus investing in anything?

Louisiana Salge: Well, EQ Investors is a sustainable specialist — that’s all we do. We manage our portfolios with a dual mandate: to create positive outcomes for society and the environment, and to generate financial returns. Over time, you can see our sustainable portfolios are on par with traditional portfolios in terms of performance.

In the short term, because we don’t hold certain companies that don’t align with sustainability objectives, performance might vary — sometimes outperforming, sometimes underperforming. Clients just need to understand that. But in the long term, companies solving big global challenges are exposed to strong growth opportunities. If you address unmet needs, that’s a great market opportunity.

Lisa Conway-Hughes: So you’re picking the future problem solvers.

Louisiana Salge: Indeed. Or even the current problem solvers! If you’re treating eight patients, you’re already creating impact — making people’s lives better with real healthcare solutions.

Lisa Conway-Hughes: And I think a lot of clients won’t know that you’re actually an activist as well. So it’s not that you’re just sat behind a computer. Tell us about that and some of the interesting things you did last year.

Louisiana Salge: Of course. Across all shades of sustainable investing, you can use your shareholding to drive change. If you’re a shareholder, companies work for you. You can use that leverage to push them to higher standards. Even our Positive Impact Portfolios — which invest in the crème de la crème — still have room for improvement. Sustainability is a moving goalpost.

So we engage with fund managers to push for change, and we also directly engage with companies. This year, for example, our engagement themes include climate, biodiversity risk, human rights in supply chains, nutrition, and AI for good.

I was on a call yesterday with a Brazilian bank — Brazil has a lot of rainforest — to ensure their agricultural lending isn’t driving deforestation. We pushed them for transparency on how their lending aligns with halting deforestation in the Amazon.

We also attend Annual General Meetings (AGMs). Even owning one share gives you the right to attend, ask challenging sustainability questions, and hold companies accountable. For example, I attended Rio Tinto’s AGM — not a company we hold, but we engage with mining firms because they’re vital to the global supply chain. I asked about how they’re adapting their products for a net-zero future.

90% of attendees were also there to challenge the company — which was uplifting!

Lisa Conway-Hughes: That’s brilliant. And when we talk about investing in some companies but not others — take the US tech industry, for example. What do you think about the “Magnificent Seven”?

Louisiana Salge: Tricky question! They’re very different businesses. We assess them based on what products and services they provide and how responsibly they operate.

For instance, we’d never invest in Meta (Facebook) — lots of controversies around mental health, misinformation, and poor governance. Shareholders have no voting power because Mark Zuckerberg controls it all.

Others, like Microsoft, are better governed, with solid net-zero targets. While AI increases energy use, Microsoft offsets it with renewable energy and builds energy-efficiency software — so there’s nuance between them.

Lisa Conway-Hughes: Are there smaller companies doing great things for the future?

Louisiana Salge: Yes, many! On the equity side, one is Vertex, a biotech company that created a breakthrough cystic fibrosis drug called Trikafta. It increased life expectancy for patients from 65 to 89 years.

Lisa Conway-Hughes: That’s incredible — I actually did a presentation for the Cystic Fibrosis charity about that last year!

Louisiana Salge: Exactly — a perfect example of investments changing lives.

On the bond side, I love the Women Entrepreneurs Bond by NatWest. It’s a social bond where the proceeds go towards empowering female entrepreneurs across the UK — helping them start businesses, employ more women, and bridge the funding gap between men and women.

Lisa Conway-Hughes: That’s amazing — and much needed. What’s the most challenging part of your job?

Louisiana Salge: Deciding what “good” actually is. Sustainability is constantly evolving — what’s good today might not be tomorrow. I constantly evaluate new research and evolving global challenges to find companies addressing the most pressing needs.

Collaboration is also key — no one investor can do it alone. That’s why I lead some of our industry collaborations to create stronger, collective impact.

Lisa Conway-Hughes: For someone just getting started, do they need a lot of money to invest in this kind of portfolio?

Louisiana Salge: No, not at all. You can invest in EQ’s portfolios with relatively small amounts. I’d recommend reading impact reports, exploring your interests — whether climate or social change — and working with a financial adviser who can guide you.

Unfortunately, there’s still a lot of greenwashing. Regulation is coming, though, to set minimum standards for what funds can call themselves. That’ll increase transparency.

Lisa Conway-Hughes: That’s good to hear. Will it really help the consumer, though?

Louisiana Salge: Hopefully, yes — though there’ll be teething issues. The key is transparency. Investors must now show what they mean by sustainable investing and back it up with data. That’s something EQ has done for years.

Lisa Conway-Hughes: And can a regular person check how green their investments are?

Louisiana Salge: Some data providers like Sustainalytics and MSCI ESG offer limited free access. You can look up your fund and see its sustainability characteristics. Otherwise, a financial adviser can help interpret that data.

Lisa Conway-Hughes: Lovely. Well, thank you so much for coming on, Louisiana. I think people will have learned a huge amount. I’ll put everything in the show notes so listeners can look up the Positive Impact reports and see what you’ve got on your website.

Louisiana Salge: It was so nice to talk to you. Thank you for having me.