Lets take a quick look at the sustainability of my Vrijheid Fonds.
One of the most important topics at my work is sustainability. It is sustainability, cradle-to-cradle, circular, etc. Every project that is executed has to meet certain sustainability standards. So when I come home after a hard day work, I still think and/or read about it.
Last week I sat behind my computer thinking about which company to invest in, I looked at my Vrijheid Fonds, and the question popped in my head, how sustainable is my Vrijheid Fonds?
If you look at my portfolio, you can see that one my biggest holdings is Royal Dutch Shell (RDS). And when I think of RDS I think of oil and not immediately of renewable energy or sustainability. But is this correct? Or are my associations with RDS outdated? Time to find out!
Shell and sustainability
It is fair to say that the general consensus is that oil is not really a sustainable commodity (You gotta love an understatement). And yes, with oil Shell earns its money. Well hold on Pollie, this was in the early days, since 2012 the company produces more gas than oil. This is important to understand.
And if you read a bit further on their website, you can read that Shell is investing a lot of money in research and in renewable energy the last couple of years. And very important to mention is that in November 2017 RDS has announced a plan with the ambition to meet the Paris climate agreements. RDS is the only major oil company with such a plan! So you can say that RDS is one of the pioneers of the industry.
RDS has a complete website about what sustainability means to shell. This website has a lot of information, and certainly worth to take a look at.
Sustainability at Shell is about delivering energy in a responsible way to meet the world’s growing needs.
Is it enough? Well, every one has to answer this question for itself. In my humble opinion this is a great start and I welcome every single step, no matter how small or big it is, to a better and more sustainable world. Because I hope that my children’s children will have the same world and the same opportunities as I do.
Okay, this is my humble opinion (and what do I know, I’m just a normal guy from the eastern part of the Netherlands) and I know that the company itself provides the information. So lets look a little bit further and dig a little bit deeper.
But were to start? That was the question where my initial research ended. But after a good night sleep I got an idea. You all know that in investing we have a lot of different indices. And yes there is also a sustainability index. So lets take a look at the most important index for sustainability.
From the RobecoSam website: The Dow Jones Sustainability Indices (DJSI) are a family of best-in-class benchmarks for investors who have recognized that sustainable business practices are critical to generating long-term shareholder value and who wish to reflect their sustainability convictions in their investment portfolios. The family was launched in 1999 as the first global sustainability benchmark . They track the stock performance of the world’s leading companies in terms of economic, environmental and social criteria.
Created jointly by S&P Dow Jones Indices and RobecoSAM, the DJSI combine the experience of an established index provider with the expertise of a specialist in Sustainability Investing to select the most sustainable companies from across 60 industries.
The indices serve as benchmarks for investors who integrate sustainability considerations into their portfolios. And it provide an effective engagement platform for investors who wish to encourage companies to improve their corporate sustainability practices.
And if we take a look at the DJSI World (ticker: W1SGI), we see RDS as one of the top 10 constituents of this index. With the big research department behind this index, and the long existence of this index, I believe this is a good (enough) benchmark for me. And If I look at RDS and now knowing that they are a top 10 constituent of this major index, they must do something right 😉
How sustainable is my Vrijheid Fonds? For that I looked at one of my biggest holdings. On the basis of my own little research and with the help of the best-in-class benchmark for sustainability, I think that RDS for now fits well in my portfolio.
Of course we have to see if the company will put its money were its mouth is and really implement its plan to meet the Paris climate agreements.
So it is important that Shell keeps working on its climate ambitions. And I will keep a close eye on the management if they achieve these climate ambitions.
And furthermore I learned during my research is that ultimately, putting together a sustainable portfolio is primarily a personal choice. You have to decide for yourself which topics and innovations are important to you.
Do you take sustainability into account in your investment decisions?
I like to hear from you.
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