Sustainability and Stewardship Report 2022

Click here to download the full report

Foreword

“To use a computer analogy, we are running twenty-first-century software on hardware last upgraded 50,000 years ago or more. This may explain quite a lot of what we see in the news.” ― Ronald Wright, A Short History of Progress

Over millennia, humans have evolved to identify and respond to immediate threats. For most of our history, this served us well. Short-term threats were aplenty and neither the ability nor responsibility to plan decades ahead were yet upon us.

We now have a much greater understanding of the challenges facing humanity and the timeframes over which they could occur. Yet, as the above quote alludes to, is our very nature limiting the action being taken in response?

For instance, our understanding of the causes and effects of climate change has moved forward significantly in recent decades, but action to address it collectively falls short of the goals of the Paris Agreement. Is this because timeframes such as 2030, 2050, or 2100 feel so distant?

Possibly, especially as the modern world is not devoid of shorter-term challenges and threats, as demonstrated in 2022 by the tragic events of the war in Ukraine. In addition to the immediate humanitarian costs, the war also demonstrates the links between societies and our environment.

In response to Russia’s aggression, Western nations have sought to reduce imports of oil and gas from Russia. This has led to a reshaping of energy markets, prompting debates around energy security now and over the long term, with environmental and social implications whatever the chosen path.

The providers and allocators of capital, us included, have a key role to play in the fair transition to a more sustainable global economy. But, while necessary, this alone will not be sufficient. Capital allocation needs to be combined with government policies containing credible mixes of carrots and sticks.

In that respect, 2022 may prove to be a seminal year with the signing into law of the Inflation Reduction Act in the United States. The Act directs meaningful government spending towards emissions reduction technologies, as well as environmental justice issues. This bold move is likely to increase the level of policy ambition on this side of the Atlantic.

However, not all policy moves have been positive. In parts of the US, ‘ESG investing’ has come under attack as a breach of fiduciary duty and a form of ‘woke capitalism’. In our view this represents a fundamental misunderstanding of what our responsibilities as investors are. We believe that in the long-term sustainability factors are ultimately financial factors and need to be taken seriously. We take pride in the role we play as stewards of capital in 2023 and beyond.

Read more articles

  • US dollar momentum

    Strategy Blog

    The dollar’s current upward momentum looks to have been underpinned by relatively strong US growth. We examine the ‘dollar smile’ theory, which seeks to explain when we should expect strong performance from the greenback, and the impact for investors.

  • Higher for even longer?

    Perspectives podcast

    Market sentiment has recently shifted, and geopolitical tensions have re-escalated in the Middle East. Join our Global Investment Strategists to explore whether the "higher for longer" scenario regarding interest rates has returned.

  • Rothschild & Co wins M&A Bank of the Year in EMEA from GlobalCapital

    Awards

    Rothschild & Co has been named M&A Bank of the Year in EMEA from GlobalCapital at its Equity and M&A Awards 2023.

  • Rothschild & Co appoints UK Head of HNW Wealth Management

    Press releases

    Rothschild & Co’s UK Wealth Management business has appointed Fernanda Rosset as Head of High Net Worth (HNW) Wealth Management.

  • Market sentiment sours in April

    Monthly Market Summary

    Global equities declined by 3.3% in April (USD terms), alongside government bonds which fell by 1.5% (USD, hedged terms).

  • Five Arrows announces reset of European CLO, Contego X

    Press releases

    Five Arrows, Rothschild & Co’s alternative assets arm, is pleased to announce the successful pricing of the reset of Contego X following the end of its non-call period.

Back to top