Jupiter: 'Mainstreaming', disruption and the drivers for environmental investing

Talking to Professional Pensions editor-in-chief Jonathan Stapleton as part of a new video series, Thomas (pictured) - the head of strategy for environment and sustainability at Jupiter - said the key drivers for environmental investing from a pension scheme perspective were becoming increasingly compelling.

Thomas said: "Pensions are about long-term investments and that is very much aligned with what we are trying to do with environmental investing in the sense that many of the issues we are looking to invest in - around water, waste and climate change for instance - are all about long-term issues and therefore we see there is symmetry between both pensions and long-term investing.

"I would also point to issues around an aspect I call mainstreaming - that environmental issues are increasingly becoming mainstream to both our individual lives and our public lives and I think that is an important consideration as well."

Thomas said Jupiter is currently looking at a number of key investment themes - including waste and waste recycling, as well as clean energy

In addition, he said there is a lot of interest in electric vehicles and, more broadly, renewable energy as well as aspects of water, soils and food.

But he challenged the view that disruption - currently a key theme of environmental investing - was challenging to make money out of.

Thomas explained: "You have to recognise that, with disruption, it takes longer than you expect. We look at - and certainly follow - early stage companies but are very patient about when and how we want to invest and it is only when we see that tipping point of greater adoption that we tend to get involved."

Thomas also spoke about how Jupiter defines its investment process when environmentally - explaining the key stages it goes through when assessing an investment.

He said: "First of all, we need to ensure the companies we are investing in meet our criteria and are providing environmental services.

"Then it goes into the fund management area which is focused around three core principles: firstly, that a company produces a leading product and service; secondly that the management team are the right sort of team to develop and grow companies in this area; and thirdly it is very much around the financials, and we look for companies that can deliver good steady returns aligned with a growth profile."

Despite this, Thomas said the way in which his team works has changed over time.

He explained: "It used to be very much the case of the greens in the corner but I think that has really changed. And I think it has changed because a lot of other fund managers now recognise the importance and opportunity around this area [environmental investing] - and if I look at many of our funds today, probably nearly half the holdings we have would be held by other managers at Jupiter, which is great as we have more views feeding into the investment approach."

Thomas concluded by looking at the outlook for environmental investing - noting how new technologies around things such as electric cars were rapidly coming to the fore and explaining how there was also significant momentum around action on climate change.

And, while Thomas noted there could be potentially negative issues, such as the arrival of President Trump, he felt optimistic overall.

He concluded: "There are multiple dimensions at the moment but, overall, I would point to a promising outlook because, at the end of the day, environmental issues are not going away, in fact, they are going to be more prominent in our life and that is the important aspect from an investment perspective."