A burning issue

Us Brits know the weather never fails to provide a topic of conversation from “it’s chucking it down” to “it’s Baltic out there”. However, the heatwave that recently hit the UK is having effects beyond social icebreakers.

Last week at Ascot, the 30° temperature left many racegoers experiencing heat-related illnesses from mild symptoms all the way to hospitalisation. Some might say that’s hardly surprising given the number of people dressed to the nines in their top hats and tails, but even though we’re a nation known for complaining about the weather, heatwaves really do pose serious health risks. According to World Weather Attribution, 60,000+ people died due to extreme heat in Europe in the summer of 2022, a figure that has been closely followed in subsequent years.

As we’re so accustomed to grey skies in the UK, infrastructure is proving slow to adapt. Londoners know best that the second the mercury hovers above 30°, rail networks buckle and reports come in of overwhelmed hospitals, damaged crops, supply chain disruptions and unreasonable working conditions, especially for those without air conditioning.

You’d think therefore that public rhetoric around sustainability would be louder now than ever, especially considering the BBC’s recent article “Three years left to limit warming to 1.5C, top scientists warn”. Yet, if anything, the topic is quieter now than it has been in years due to the ongoing backlash around sustainability and ESG in the political sphere. And this makes it relatively easy in a ‘safe’ country like the UK to disassociate from the impacts of a changing climate - until a reminder comes to our doorstep.  

Unlike oscillating political agendas, businesses can’t easily afford to flip flop on the issue of sustainability. As the demand for energy keeps increasing and industrial output continues to grow in the coming years, the need for energy diversification and the impact of climate change will become starker. Businesses that don’t or can’t adapt their operations will ultimately be left behind, if for no other reason than a split with public opinion. According to a YouGov survey last year, the British public don’t think businesses are doing enough for sustainability, and only 9% of those surveyed think the financial services sector is doing enough to reduce their environmental impact. Our industry is not exempt from this responsibility, and building trust on this issue will be paramount to maintaining our long-term credibility with clients.

There are a number of sceptics in our industry who point to limited client demand, seemingly at odds with client surveys which point to broad interest in the topic. For all that, the wealth management industry is, like others, adapting its operations with sustainability in mind. We have further to go to broaden our advice, hit significant sustainable operation targets and increase education for our employees and clients on responsible investments – if we’re to earn the confidence of the public and ensure we’re playing our part.

Our industry has a unique responsibility in the transition to a more sustainable world due to our direct involvement in our clients’ investments. As we often say at Julius Baer, “how we invest today is how we live tomorrow” and it’s never truer than when it comes to shaping a more sustainable world.

Any wealth manager will tell you that even the smallest of small talk can lead to a decent client conversation. So, whilst I may jest about the greatest British conversation-opener, the weather, perhaps these moments might prompt a broader discussion about more than just the heat: one about how we can all contribute to a future where we don’t each need to carry around industrial-size fans.