For PA Future‘s turn-of-year series New Era, members of the sustainable investment community reflect on last year’s developments and share predictions for the coming year, as well as sharing some eco-friendly Christmas hacks and the one thing they want to see under the tree to accelerate the transition.
Here, Charlie Thomas, CIO at EdenTree Investment Management, shares why SDR has helped them as a business, how impact investing will come to the fore and supporting fund buyers in this transitional phase of sustainable investing.
What was the most sustainable investment initiative your team undertook in 2024?
It has to be the work we’ve done around SDR. It could be easy to write off SDR as just another piece of regulation, but I’ve been working in this industry for over 20 years now, and I genuinely believe that this year has seen the single biggest change in the UK sustainable investment landscape since it began.
It certainly hasn’t been all been plain sailing for the industry thus far, and a huge amount of work has gone into the process this year. It has, however, been incredibly unifying, and for all of us at EdenTree it has truly helped crystalise who we are as a company, what we do, and why we do it. That’s been really exciting.
Were there any unexpected challenges or triumphs in your sustainability journey this year?
I think the biggest challenge this year has been an emotional one. We’re going through a period of intense geopolitical change, and it’s created a lot of short-term uncertainty. Was it completely unexpected? Perhaps not. But I would say the pace of change has been greater than many would have predicted.
We’re not in the business of putting our heads in the sand and pretending these challenges don’t exist, but it’s important to realise that that this uncertainty in no way takes away the opportunity. If anything we’re probably seeing more innovation, more focus on long-term solutions than we’ve ever seen before.
SDR has been rolled out to the UK funds market. How has this adopted within your business? Has this been a positive development?
We’ve made good progress with SDR this year, and are pleased to now have a fully labelled impact investment offering across the three major asset classes. We continue to be supportive of SDR, and believe it will ultimately have real benefits in terms of improving investor understanding and reducing greenwashing risk. It is clear, though, that it may be a longer and more evolutionary process than many initially expected, and we continue to work closely with the FCA, and across the industry, to make sure we are all working towards a regime that truly delivers greater clarity and transparency while continuing to support differentiation, innovation and customer choice.
What do you predict will be the biggest trend in sustainable investment in 2025? Are there any emerging sectors or trends you are particularly excited about?
I think 2025 could well be the year that impact really comes to the fore.
Impact investment is a really important way of creating positive real-world outcomes, but it has traditionally been one of the harder areas for investors to understand and for providers to articulate clearly. One of the real successes of SDR has been the clarity it has brought to this market, and this has been reflected in the early growth we have seen in the adoption of this category label across the industry.
Impact is also one of the areas with the most fertile prospects for innovation, and we believe we could see some really exciting growth from the roots set down this year.
How do you think global events or economic shifts might influence sustainable investing next year?
It is clear that macro events will once again have a big impact next year, and the change in US political leadership will of course be a huge part of this. While President Trump can in no way be heralded as a champion of sustainability, what he will bring, for better or worse, is a certain degree of clarity. Markets hate uncertainty, and certainty, whether positive or negative, tends to be good thing for all investors. At times like this, we know that emotion can override fundamentals, and that can throw up really interesting investment opportunities. Against this backdrop we are more attentive than ever to these disruptions in the market, and remain as interested in the sector as we have ever been.
What are the top challenges sustainable investment teams will face in 2025, and how will you tackle them?
In a continuation of the SDR theme, I think the biggest challenge in 2025 will actually be for the fund buyers in responding to the huge amount of change we have seen in the industry this year. As providers, we must ensure that we are doing all we can to support that transitional phase. There will be a phase of digestion, of understanding how best we can all work together to ensure clients receive all the information they need, and are able to access the investments best suited to their needs. Products will reprofile, expectations will change, but ultimately there should be more clarity in terms of what people are buying and what it means. SDR is a multi-year regulation, and one which will continue to have impact throughout the entire value chain next year.
If you could set one new industry standard or regulation in 2025, what would it be?
I hope this isn’t a cheat (!), but if I could introduce one piece of regulation for 2025 it would be to put a mandatory pause on all further regulation. We live in a changing world, and regulation is of course hugely important, but as an industry what we really need now is a little certainty, and the opportunity to bed in the huge amount of progress that has been made in 2024. By setting down these foundations we can build a stronger, more impactful and more productive industry.
See also: Regulatory outlook 2025: Could upheaval lead to overload?
What’s the most eco-friendly hack you tried at Christmas?
This Christmas I continued a family Christmas tradition that’s been running for many years now. About 10 years ago I attended a party where, at the end of the night, a number of Christmas hats were going spare – likely set to be relegated to the back of a cupboard somewhere at best. I took these home and they’ve become a firm feature of every Thomas family Christmas since. The family parade as elves, Christmas trees and turkeys galore, and the entertainment this provides reminds us that not everything has to be new to be of value, and that every small habit you build – however small it feels – counts when you’re building a sustainable future.
I’ll be continuing this outlook into my home and working life in the new year – whether it be re-using over buying something new, or taking public transport (of all kinds!) to meetings around town.
What’s the one thing you’d love to see under the tree to help accelerate sustainability in 2025?
If I could put one present under the tree this year for all investors it would be a parcel of optimism. As investment professionals we see a lot of negative news, but we are also incredibly privileged to receive daily insight into the boundless solutions being developed across all parts of the economy. Yes, the world can feel like an uncertain place, but there is a wealth of opportunity out there for those who look for it.
