What is your role in Barclays’ sustainable offering?
I joined the private bank in 2010 as a portfolio manager, then in 2018 I launched our sustainable offering. We aim to provide our clients with a way of maximising risk-adjusted return, while helping to address global sustainability challenges. We recognised that a lot of our clients who are investing in sustainable strategies are charities and have the primary fiduciary duty to maximise the return of their investment pots in a way that is aligned with their stakeholder interests.
The demand for a sustainable strategy initially came from our university clients, which were under pressure from students around divestment from fossil fuels. By creating a sustainable alternative, we were able to change the narrative, putting investments in a positive light and placing clients at the forefront of driving change in line with the priorities of their stakeholders.
Since then, our sustainable portfolio strategy has grown, becoming not only the default for all our charity and not-for-profit clients, but also for many of our private clients.
How have recent geopolitical events impacted client demand for sustainable investing?
There has been a big change in the global political landscape over recent months, driven by policy change and geopolitics. I think this has seen the pendulum swing away from an environmental, social and governance (ESG) mindset. However, I think this has polarised investors into two camps: those who don’t see “ The pendulum has swung away from an ESG mindset ” sustainability as a priority and those that definitely do. Those that do, have become more emboldened and invest further. Perhaps counterintuitively, we’ve seen stronger demand for our sustainable solutions, especially around climate change, despite this change in the geopolitical narrative. No matter what the political cycle, the planet is still warming, and our charity clients in particular are committed to tackling that.
There is a lot of noise around corporate ESG targets lately, with some companies choosing to be more muted around ambitions publicly. But that doesn’t mean they don’t still have diversity or environmental policies in place, embedded in how they operate. In the end, it comes down to economics. If being diverse and sustainable is good for business, then companies will continue to do it. It’s got to make financial sense, and a lot of responsible investment does.
What sustainability themes do you invest in?
From an investment perspective, we have always seen a risk in business models which are dependent on government policy and funding. These businesses have become more exposed in recent months as government funding priorities are re-evaluated. But we still see plenty of opportunities within the sustainability space.
We differentiate our sustainability strategy by not having a thematic approach. There is a problem across the industry where managers start with a top-down theme and try to shoehorn companies into those themes. If you have a renewable energy theme, for example, and try to fill the portfolio with only those companies, then the quality of the investments and your ability to effectively diversify will deteriorate.
Thematic investing can increase risk by limiting the opportunity set and your ability to diversify, to the potential detriment of portfolio return. In sustainable investment, it’s important to keep the range of opportunities as wide as possible and get broad exposure to as much of the global economy as you can through businesses that are operating with high ESG quality and are providing solutions that address sustainability challenges.
What impact will AI have on sustainable investing?
AI has the potential to be one of the greatest tools we have for addressing a wide range of sustainability challenges – from energy efficiency to drug discovery to educational tools and the development of new resistant materials that can go into battery technology. For instance, some of our companies use AI to optimise how buildings are heated and cooled, a process that accounts for around 20% of global emissions. This could reduce global emissions by one gigaton a year. So, there is huge potential.
I think there is a risk that AI creates an inequality between AI-enabled countries and those that don’t even have access to the internet. There is a danger that companies in places such as Silicon Valley will harvest data from around the world to create new consumer products, new drugs and AI tools, and monetise them, leaving the rest of the world behind.
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Fast facts
£209bn in client assets and liabilities and manages £30bn in discretionary portfolios*
Over £3bn AUM for charity and not-for-profit clients*
Top quartile investment performance over 1-, 3- and 5-year for flagship sustainable charity multi-asset endowment strategy vs. ARC Peer Group**
$162.2bn of sustainable and transition financing mobilised as at the end of 2024, as part of our $1tn target
£203m of capital invested into global climate tech start-ups through our Barclays Climate Ventures mandate to invest £500m by the end of 2027
*As at 31 December 2024
**Past performance is not a reliable indicator of future performance. Neither capital nor income are guaranteed. Source: Asset Risk Consultants, https://tinyurl. com/42fkzk3h as at 31st December 2024. ARC Peer Group: Steady Growth ACI
What we do
Barclays Private Bank provides a full suite of specialist investment, banking and lending services – backed by 330 years of Barclays Group experience. Our dedicated charities and not-for-profit team takes the time to understand your unique requirements, and creates bespoke solutions that meet your financial goals and align to your values. Barclays Private Bank has client assets and liabilities of £208.9bn as of YE2024 across a range of services including: discretionary multi-asset, fixed income and equity portfolios, sustainable portfolios, advisory services including private markets, cash management and credit facilities. Visit us at Barclays Private Bank Charities.
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