The National Trust: one of those quintessentially British brands which exudes a tea and cake charm. Yet the fact that the charity had money invested in fossil fuels felt seriously out of step with their mission. So it was welcome news indeed when on 4th July 2019 the National Trust announced their plan to cease all investment in fossil fuel companies.
Few people appreciate the scale of the National Trust. It’s Europe’s largest conservation charity, looking after 780 miles of coastline and 248,000 hectares of land. And while some may curl their lip at the fact that the charity has fossil fuel investments, it’s important to note that the National Trust’s investment policy was already reasonably admirable in terms of eco credentials.
The National Trust’s investment portfolio
Before their announcement last July, the National Trust stipulated that no investment could be made directly in companies that derived more than 10% of its turnover from the extraction of thermal coal or oil from oil sands. Having now promised to cease fossil fuel investment and remove existing fossil fuel investments, the National Trust must repurpose 4% of its portfolio.
With a fund value of just over £1bn, 4% represents a not insignificant sum. For this reason it’s eminently sensible that the National Trust has committed to a three-year timeline to divest of its fossil fuel investments, though they anticipate the majority of divestments to be completed within twelve months.
The pace of divestment
Divesting too rapidly can seriously damage the value of a fund. As a charity the National Trust has a responsibility – both to itself and its end-users – to sell their fossil fuel shares slowly in order to maximise the money they recoup from the share price. By selling too much, too quickly, it’s possible to make serious financial losses. The approach that the charity is taking therefore feels optimal and is a strategy that we would endorse.
The National Trust’s returns from their investments are crucial for helping the charity to protect and care for some of the nation’s best loved and most beautiful places, while keeping membership fees affordable for the millions of people that enjoy them. As such it’s patently sensible to divest from fossil fuels gradually, with no sudden movements that could harm the investment returns that the charity generates.
As for the future, the National Trust’s fossil fuel divestment is just a small part of a wider strategy to become a torchbearer for sustainability and eco-friendliness. Tabled initiatives include investing in green startup businesses and encouraging all companies that they are invested in to take active steps to improve their environmental performance. Another big plus is that in the last four years the charity has developed their own green heat and power through heat pumps, hydro schemes, solar PV and wood fuel boilers.
That’s all great news, giving the National Trust more leverage to continue their great work and retain their credentials as one of the nation’s most popular charities.
About P1 Investment Management
P1 analyses businesses to make sure their green credentials are what they claim to be, while helping investors to make more sustainable and planet-positive investment choices with our ethical investment funds. Find out more at www.p1-im.co.uk.