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RTC25: How to invest in environmentally friendly companies · The Curve

• 0:00
  Welcome to season two of Raising the Curve, a conversation for women who want to
• 0:06
  learn more about money, via money. For the future they want to have. The pursuit
• 0:11
  for financial confidence and increasing your wealth should be a simple one. So
• 0:16
  this is a place for you to learn about investing in finance in a non-scary or
• 0:20
  intimidating way. Thank you for being here and for listening. Because together we
• 0:25
  really can raise the curve. It's quite funny being at the start of the
• 0:30
  season, we came into the studio with makeup on nice clothes, really making
• 0:36
  effort because these are being busy. No you're not, you're gym gear. I put
• 0:40
  makeup on, I swear to make it. And then I put ginger on. Oh sorry, I haven't.
• 0:47
  Really look like a bad weekend. It's Wednesday and I'm still struggling. Really
• 0:53
  battling. It's like my brain won't connect again. Oh that's good. We're about to
• 0:58
  educate women. It's lucky that I'm not educating actually. Yeah. Just asking
• 1:04
  many annoying questions. As per usual. Don't get me a complex. Sorry. When I was in
• 1:10
  year five my teacher said to me, God you ask a lot of questions. I was like
• 1:14
  shut down for ever. It was actually a really horrible thing to say to a child. I
• 1:17
  heard someone on the beach their mother tell this little girl it's like
• 1:20
  you always ask so many questions Mary. I was like I hope my child asks a lot of
• 1:27
  questions. They're learning. Yeah, no, you can be very careful. Now we also just
• 1:33
  need to preface this episode by saying that Victoria has bought her kidding. She
• 1:40
  bought a dog. We're just going to if you hear any like
• 1:46
  talking to me. We're just letting you know that it's not us. This is a sick
• 1:50
  and appearance on the podcast. Yeah. Yeah. The first time she was like two
• 1:54
  weeks old. Yeah. So cute. All right. What is our episode? Can you hear her
• 1:59
  chewing? Because I can. What is your choice? Eating something. Me so. I'm here.
• 2:04
  Sorry. What are we learning about today? We're talking about
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  consciousness and testing and it was actually really funny on the way here. I was
• 2:11
  talking to a guy at work and he said, well you're doing this evening. I was like,
• 2:14
  I'm going to podcast and he goes, oh, what's the topic? And I said,
• 2:17
  conscious investing. He goes as opposed to unconscious investing.
• 2:21
  It's quite true. I was like, it's true. I was like, we should all conscious
• 2:24
  investing should just be investing. Yeah, I was tilting my head to the side going,
• 2:29
  yeah. Oh, no. Yeah. Kind of whole episode. Shit, shit, shit.
• 2:35
  Yeah. So it's not just con. It shouldn't just be conscious investing in terms of what
• 2:39
  you invest in. It should be companies that are consciously operating in the world. But also,
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  you shouldn't be investing money unconsciously. Yeah. It's more you should be knowing where your
• 2:49
  money is going and taking almost a view when you're investing it, that it's been put in the right
• 2:57
  place. That's what we remember, conscious investing, sustainable investing, responsible investing,
• 3:01
  cool, what you want. But we've called it conscious investing. I don't think I would,
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  I don't think I would want to be investing in any, in fact, I definitely wouldn't,
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  in companies that weren't somewhat or predominantly green, you know, and making a real conscious
• 3:18
  effort to not be producing heaps of greenhouse gases and having a big footprint. I mean, like,
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  what kind of companies are going to survive in five years time that are doing that anyway?
• 3:28
  Exactly. That's one of the things that we all have always talked about as investing in structural
• 3:32
  growth industries. So industries that are growing and will continue to grow for years and years,
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  because if you're investing for the long term, you want to be investing in a growth industry.
• 3:42
  A company that's going to be there in ten years. And so if you're investing in a company,
• 3:46
  an oil company. An oil company is like, good luck to you. Yeah. No, it's probably just not going
• 3:52
  to be around, it's market shrinking and shrinking and shrinking. So therefore, it's hard
• 3:55
  for something to grow and grow and grow and industry that's shrinking.
• 4:00
  So Vicki, you work in, you manage a fund that is a trans-tasmin eco-friendly, would we say,
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  environmental? What's it technically called? Yeah, that's not what we call it, but yeah, it's a
• 4:11
  kind of sustainable sustainability fund. And so with that fund, I am researching and looking
• 4:19
  for companies and looking for ideas that are sustainable effectively and that will be around
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  for years and years and years. So this is an area that you're like extremely. And I did
• 4:32
  at my previous job, but I was looking at global companies that were like this. And then now this
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  this job I'm doing just, I'm doing trans-tasmin. But it's looking for companies that
• 4:43
  either have a positive impact on the environment or actively reducing the impact on the environment.
• 4:48
  And, or I'm just seeing more and more and more companies coming into the space because they can
• 4:55
  see such a huge trend. And naturally, I mean, you can't look at the newspaper without
• 5:01
  seeing either some kind of flood or fire or, you know, some kind of impact of global warming or
• 5:07
  climate change. And so if you're investing in a, I don't know, an arm and grower, that, yeah.
• 5:14
  Armin's a quite bad female. Totally. And there's, and there's a, don't drink
• 5:17
  arm and milk. No, there's a user. And cows as well, actually. I was fascinated. I was looking
• 5:27
  through, we get so much documentation to read and etc. And I was so fascinated. I was looking
• 5:31
  at a presentation on ESG investing, which is environmental, social and governance and
• 5:35
  investing. And one of the charts was the biggest emitters in New Zealand, greenhouse gas emitters,
• 5:43
  which was the dairy industry and the meat industry. And I was like, gosh, I was like, the one
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  thing I'm taking from that is that I need to, I need to eat more vegan. I need to eat more
• 5:53
  carbon. I know this. I feel like I'm having a lot of benefits. I know it sounds stupid, but I
• 5:58
  thought other things were worse. Well, I just, I knew it. But I think seeing it in perspective
• 6:02
  on a graph, I'm a numbers gal. You know, I really could see, wow, if everybody just had one
• 6:12
  meal out of their week that was part-based, you know, how much, how much that would have
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  an impact positive impact on our country. Yeah, cow sparracies are really awesome documentary,
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  if anyone's interested to learn more about that. We should watch it together in your
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  refresher. Should we go now? Yeah, we're done. Thanks for listening.
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  But I, I totally agree with you. I think that there's, there's, there's going to be a huge
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  shift, I think, in terms of diet. And especially if you're looking at that, would you say a trend
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  that you maybe could invest in as a growing industry would be plant-based, vegetarian,
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  that's a tree-rooted trend definitely. Yeah, yeah. And there's, there's not very many listed companies
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  yet in that space. I mean, there's a few, like beyond meat, for example, was, was one IPO that
• 7:01
  did fantastically well. And can we still have this in that? Yeah, you can still have this in that,
• 7:05
  yeah, that's listed on the NZX50. On moment, please call it. It is listed on the NASDAQ.
• 7:16
  I thought that was a New Zealand company. No, I mean, it hasn't done very well. But what's
• 7:21
  it said again? It is, it's been, it's pretty flat from its IPO back in 2019. But what did it IPO?
• 7:30
  That mean that's only two years ago. And we're investing for the long time. The IPO to 66 since it's
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  63. So it's, you know, it's, but it's more taking that long to view being like, my god, more people
• 7:39
  going to eat, eat less meat. They're going to be eating more plant-based. You know, maybe invest in
• 7:44
  a few different company, plant-based companies or a few different climate, friendly companies.
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  You know, maybe it may be one in nutrition or a food company, maybe one some cool technology
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  that is, is helping companies reduce their emissions. You know, there's so many different ways
• 8:01
  to play this, like the obvious one being Tesla, for example. Tesla, what's their share price at now?
• 8:08
  You think that I would just like, no, these are from a human. Sorry, I do treat you like this.
• 8:12
  So many different stocks and ones, ones I look at like every day I know, but so Tesla's share price
• 8:17
  is at a thousand US. A thousand US for one share. Yeah, but they're the most obvious ones.
• 8:22
  There's so many. Would you buy that on stake? Because it's an, it would be American listed.
• 8:27
  Yeah, yeah, yeah, you can buy that on stake, definitely. Yeah, and you can buy partial shares,
• 8:30
  which is great. So if you don't have a thousand dollars, US don't be like, oh gosh, I can't even
• 8:34
  get access to Tesla. You know, you can definitely still access it. That's actually the one,
• 8:41
  one of the, my top stocks that I want to invest in as Tesla. Yeah. Yeah, nice. Go soft.
• 8:47
  I've been in one. They're so fun. It's like a spaceship. We always say invest in what you know
• 8:52
  and invest in what you use. I jumped in the Tesla. This is a friend of mine,
• 8:56
  has one. And within, he put his foot down on the accelerator. And honestly, within like half
• 9:02
  a second wheel going so fast, my feet came up around my ears. Like I flew, they flew up.
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  It was the weirdest thing. And I felt nauseous. It was, and because I'm quite flexible as well,
• 9:13
  my legs literally went up around my ears. It was so good. Honestly, amazing. And it's the
• 9:18
  quietest thing ever. He'll back out of the driveway and you can't hear it. They're amazing.
• 9:24
  I'm converted. I guess from an investing standpoint as well. Like we're talking about companies
• 9:30
  becoming more conscious about their impact on the environment. But it's also, this is being led
• 9:35
  by invested demand. So you were saying, I don't want to invest in a company that is having a negative
• 9:41
  impact on the environment. Well, you're one of millions and millions and millions and millions
• 9:46
  of other people. And so many more people are leading that charge that companies are going,
• 9:52
  shit, we're actually missing out on all these investors. If we don't change up as this model,
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  or if we don't become environmentally friendly, so kind of sucks that it took. It's kind of,
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  I know, people for that to happen. They're not like consciously minded themselves and think.
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  But it's quite cool. It's kind of again, a power to the people type thing of these companies wanting,
• 10:12
  wanting to get access to this growing pool investors that don't want to invest in them.
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  You know, if you've got a shrinking investor base that wants to invest in your company,
• 10:21
  as well as your industry shrinking, you know, you're up shit's creek without a paddle.
• 10:28
  So it's kind of hitting both sides, I guess, is what I'm trying to describe, if that makes sense.
• 10:34
  So you've got less capital, I guess. So your industry is shrinking. So if I was a company,
• 10:39
  I'm sitting. What's an example? So we always say society, so let's not use society. But what would be
• 10:46
  another shrinking industry? Let me have a thing. So like a company that uses fossil fuels,
• 10:53
  so BHP, Rio Tinto, all those companies that, what are those companies? I mean, is anyone else
• 11:02
  heard of them? Some of the largest companies listed on the Australian stock exchange. Let's say
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  Volkswagen. Let's say Volkswagen, you know, they produce combustion engine cars and they could see
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  there was a trend away from combustion engines, so petrol cars, to EVs, more and more consumer
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  demand. Therefore, they needed to increase the portion of their fleet that was electric vehicles
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  because the customers were demanding it. They were also seeing from an investor standpoint,
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  investors going, hang on and say, you guys pollute a lot into the environment from your petrol
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  engine cars. We don't want to invest in you. So therefore, they've got a shrinking pool of investors.
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  Therefore, they're shrinking customers. And shrinking customers. Shrinking industry, because
• 11:51
  electric vehicles are growing as a portion of overall cars. So you're making it some way to have
• 11:58
  petrol cars. And then you've got regulation coming and going, you can't produce combustion engine
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  cars from 2030, for example. Is that a thing? In some country, I think it's Norway. Norway is at the
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  most advanced. And then you've got subsidies for electric vehicle cars, which means they're
• 12:17
  competitors that are producing electric vehicle cars, are being able to sell them for cheaper,
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  and therefore attract more customers. You're just kind of getting hit by, like, left, right.
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  You know, and it's kind of, if you don't pivot to where the customer demand is or the investor
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  demand, if you need money to grow, investors aren't going to give it to you. Your share price is
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  going to keep going down and down and down because it's all about supply and demand when it comes
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  to share prices. So if the demand's not there, your share price is going to keep going down and
• 12:49
  down and down. It's going to be harder to get money from investors to grow. It just becomes a
• 12:56
  death spiral, I guess. So dramatic. I know it's death spiral. There'd be a lot of companies that
• 13:03
  would be in a situation where they don't know how to pivot. You know, they're so deep in a...
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  One recent one actually is Woolworths. And so when we talk about ESG investing, so environmental
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  social governance, what comes into that as well is a lot of investors don't want to invest in
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  alcohol companies or gambling companies because of their social impacts or the impact that they
• 13:27
  have on society. And so Woolworths just last year actually owned a whole lot of pubs and
• 13:37
  which had Pokemon machines and alcohol retailers. And so they divested that from the overall
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  group because it could see that there was a whole pool of investors that wouldn't own Woolworths
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  even though it was majority supermarkets, they wouldn't own it because it had this little bit
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  of alcohol in it. I remember the little alcohol shops attached. They had that in Australia as well.
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  Yeah. Where you go into the supermarket and to the right there's like a little wine shop.
• 14:03
  Yes. Yeah. So they were owned by... Yeah. They owned Dan Murphy. You know that they owned
• 14:09
  a whole... Oh, they owned like a liquor land or something?
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  They owned a pub. So part of the group is like, you've got supermarkets, you've got alcohols
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  as you've got hotels and pubs. So Woolworths isn't just supermarkets, it's a big group.
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  But a portion of their revenue and earnings came from selling alcohol and running Pokemon machines
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  and sports bars and stuff. So investors were like, we don't want to be associated with that.
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  And so they had to get rid of that whole business?
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  They don't have to, but they chose to. They chose to because they could see there was a whole
• 14:41
  lot of investors that wouldn't invest with them because of that. So then they divested that
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  and they should price it up. You've just opened the doors to a whole lot of investors
• 14:53
  that couldn't invest in you previously. What would be the opposite of conscious investing,
• 14:58
  like whether it be sectors to avoid companies to avoid what's in the declining department?
• 15:05
  Yeah, good question. I think, I mean, we should know this, but like plastic manufacturers,
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  for example, that's a big one. I hope they're starving. I hope they don't...
• 15:15
  I hope they're all like that. But there's just increased cost regulation. It's just
• 15:21
  harder to do business. Therefore, their outlook doesn't look good. So you're wanting to invest in
• 15:27
  companies with a good outlook. Oil producers, for example, just like we spoke about with Volkswagen
• 15:33
  making more and more of their cars, electric vehicles, there's less oil demand. So any companies
• 15:38
  that produce oil are just going to have to be in oversupply or have to cut production,
• 15:45
  which will be the demise of their business. Some companies in New Zealand actually, so there's
• 15:50
  like Sky City, the gambling, they'll write the casinos as well. Are they listed?
• 15:54
  Yeah. I would never invest in Sky City. So there's a lot of investors that can't invest in Sky City.
• 16:05
  But they're like, what do they do? I think they shut down. I think they shut down.
• 16:10
  So they start holding some yoga classes instead of casinos rooms.
• 16:15
  Yeah. And Z energy, that was another one. They operate all the petrol stations.
• 16:20
  Are they not doing very well? I mean, they've been bought out now, so they've gone private.
• 16:23
  That's another thing. If you just don't have demand from public markets,
• 16:27
  the only option is to go private, really, because you don't have the support from who on earth would
• 16:34
  buy Zed. Some other dirty company. But who has the money to that?
• 16:42
  Yeah, yeah. I think it was an Australian company, yeah.
• 16:49
  Has this trend been something that's been a while or like slowly creeping up,
• 16:53
  and in the last couple of years has started to boom. Why now is it all of a sudden taking off?
• 16:58
  Great question, sir. So historically, you had to choose. Do you want to responsibly invest,
• 17:05
  or do you want financial return? Because it was like companies, you couldn't have both,
• 17:10
  really, because this trend wasn't big enough. So in the early days, it was a hard argument
• 17:16
  to make people invest eco-friendly, climate-friendly responsibly. Because returns weren't there.
• 17:24
  And it was people were like, well, no, I want to make money. So I'm going to invest where I can make
• 17:28
  money. I don't care about planet. Whereas now, because that's where the money is,
• 17:33
  and because the companies that don't act this way are being starved of capital, the returns are lower.
• 17:39
  So there's like such an argument. Well, there's no argument now because you can have it all.
• 17:44
  You can have your cake and eat it too. You can invest responsibly and grow your wealth.
• 17:49
  What's the worst company you've ever invested in? Like, that was doing naughty things?
• 17:53
  I mean, I've invested, like, we invested in Woolworth before it divested its gambling side.
• 17:59
  I mean, I think for me personally, we meet with these companies all the time,
• 18:04
  and that's kind of hard when you're invested, let yourself, because you don't have that access.
• 18:08
  But I would rather sit down with management and go, hang on a second, you should do this, this, this,
• 18:13
  or this is the reason why your share prices are doing well, even though your earnings are growing,
• 18:19
  it's because all these investors don't want to own you because of exposure. You'd rather engage
• 18:23
  with them and be like, hey, just a thought, how about you change this and how about you do that?
• 18:28
  And then help them improve rather than just sell the stock and forget about it.
• 18:34
  I remember I did a presentation and we were talking about how we invested in Visa and Mass Card.
• 18:37
  And one guy stood up and goes, how dare you invest in that company with this so much plastic?
• 18:42
  Because of their cars. Because of their cars. And I was like, mate, come on, like, you have to draw
• 18:46
  the line somewhere. And then I said, we invested in Apple when they said, what about all their
• 18:54
  semi-conductors, their electronics, their waste. One time in New Zealand here, like years ago,
• 19:00
  we said we invested in restaurant brands, which runs KFC, Pizza Hut and Starbucks at the time.
• 19:05
  And someone stood up and said, you're condoning obesity. And it's like, that's a bad one.
• 19:11
  Starbucks. But it's like, no, I reckon that counts as that.
• 19:15
  Also, okay, we invested in gyms as well. So diversification.
• 19:19
  No, I didn't mean for an obesity sampling. I meant the amount of single-use plastic and
• 19:25
  packaging. But then on the flip side, they employ their store network of like 400 stores.
• 19:32
  They employ so many people. It's just kind of, you have to draw the line somewhere.
• 19:37
  And it's like, okay, this is what we will in one invest in.
• 19:41
  This is how we've created the fund. If you're not happy with that, I don't know.
• 19:45
  It's just so hard, especially in New Zealand market where there's only 150 listed companies.
• 19:50
  If you start cutting out restaurant brands, you start cutting out the warehouse,
• 19:55
  you start cutting out maybe zed energy. Sky's said it. You're getting, you're pretty,
• 20:02
  your pool's getting pretty, pretty small. So I'm not making excuses. You're looking at me like,
• 20:08
  yes, you are. But it's easier to invest this way in a global scale.
• 20:14
  Because you can have those exclusions and those restrictions.
• 20:17
  Do you have any hard and fast rules for yourself, for your own personal investing,
• 20:21
  when it comes to conscious investing? I will and will not invest. I mean, obviously gambling,
• 20:26
  and you're not going to invest in vapour, but do you have any?
• 20:30
  I think tobacco is a big one for me. I won't invest in any tobacco companies, but
• 20:35
  again, I reckon that's a given. Why would you?
• 20:38
  I would more want to support. I think some more an optimist than a pessimist.
• 20:43
  And I would rather support companies that are doing cool things in terms of reducing the
• 20:49
  impact on the environment. Do you know what I mean? Like, beyond meat and like Tesla.
• 20:52
  Because to me, that's way more exciting. So you don't even bother with the stuff that's a little bit.
• 20:58
  There's so many companies. I don't even bother being, I'm not going to invest in New Zealand.
• 21:01
  It's more, hey, you're doing something cool, and I can see the growth, and I can see that
• 21:05
  you're going to be around forever. And I want to invest in you. What about your funds,
• 21:10
  though, when you've got huge amounts of money, and you have, you're also allowed to invest in
• 21:16
  Australia, so that's what, like, 250? So there's probably about 300 companies to choose from.
• 21:21
  Do you ever get to appointment me? I really would rather not invest this. I know it's a good
• 21:25
  investment for an end. Yeah, actually, but it's like, it doesn't really sit well with me.
• 21:28
  Yeah, totally. And it's, it's, that's the beauty of being a portfolio manager,
• 21:32
  is that you do get, you do get oversigned to what you, what you can and kind of invest in
• 21:36
  two a degree. If I keep being like, no, no, no, no, and then my boss will probably step in and go,
• 21:43
  okay, that's like, chill, you girl. That would be made. You don't need to invest in something.
• 21:49
  You can't save your money in cash, because we've got clients that we need to.
• 21:52
  I bet you're all fun. But all birds and stuff, that's why that IPO did so well,
• 21:57
  it plays into the space, like, perfectly. You know, people use that product. They know
• 22:03
  that the product's good, but it also plays into the theme of being eco-friendly and sustainable
• 22:08
  and reducing its impact on the environment. So you're kind of getting the positive effect,
• 22:13
  rather than what the negative effect will be. You're getting the positive effect from all sides. So
• 22:17
  that's, that's a cool company that I'd want to invest in, rather than being like, I don't want
• 22:22
  to invest in tobacco, I don't want to invest in gambling, I don't want to invest in.
• 22:25
  It's definitely like one of the things that you harp on about, sorry, I should not use word
• 22:29
  harp on because that sounds rude, but that you have really tried to hammer home to me, especially
• 22:35
  even just like, not even on the podcast, but just in our conversations, is invest in things that
• 22:40
  you know and that you care about and you're excited about. And I think that's why I'm starting
• 22:45
  to get quite excited, because as I've started to create a list of the stocks that I want to invest in.
• 22:50
  And this is the perfect thing for you. It's quite exciting, because now I know that this is such a
• 22:56
  growing trend that I personally care a lot about the environment and I don't want to support
• 23:00
  companies that are doing shitty things, but to be able to have all these companies that I'm
• 23:04
  like, yeah, I'm supporting them financially as well as buying their products. And you get excited
• 23:10
  and you get, you want to follow them and see what they're doing and get involved in their success
• 23:14
  and all that. And even if it's a private company that's not, you can't invest in years,
• 23:19
  you know, it might become public at some stage. So you follow it and if you use its product and
• 23:23
  you like what they do and and then they might eventually become public and you can, you'll know
• 23:26
  that business so well and then you'll be able to get behind it.