Buzz: Transfer to editor

A very wise, thoughtful and exceptionally caring woman once told me “All dining tables should be round”. Puzzled, I asked her why? She responded matter-of-factly “because you can always squeeze in another body at a round table”.

That spirit of inclusion has been lost to an overwhelming atmosphere of conflict and angst, resulting in a fragile economy that is top-heavy and brittle, propped up by a few while so many struggle.

When we prioritize the well-being for the many rather than the luxury of the few, we create a more stable society and economy. We need to get back to the spirit of the round table, where everyone has a place.

MAIN TAKEAWAYS:

• AI’s environmental, social and governance (ESG) considerations have wide-ranging implications for energy and water consumption, labour, regulation, data privacy and geopolitics that investors should be mindful of.
• Sustainability frameworks tailored to AI will allow investors to assess potential trade-offs and make well-informed investment decisions.
• We offer practical guidance for assessing datacentre sustainability characteristics and developing an AI specific corporate engagement programme covering areas such as: environmental, people and workplace, intellectual property, data privacy, and regulatory issues

Matching ability with opportunity for the next phase for sustainable investment

It won't have escaped anyone's notice that there are currently a fair number of people with considerable sustainable investment experience currently 'between jobs' - having fallen on the 'bust' side of the recent 'boom and bust' cycle for sustainable investment and ESG.

If we take the perspective (as I think we must) that sustainable investment will be (and has to be) fundamentally-different for the next iteration of its development and growth, these people should be an invaluable resource as they combine:

• an understanding of the principles, objectives, practices and lessons learned from sustainable investment
• time to think about how the industry needs to be different next time round (and the experience that enables them to make intelligent judgements about this

Some people think well on their own ... and are very welcome to continue doing so.  We look forward to hearing from them when they reach and execute their conclusions.

Other people, however, prefer to explore ideas with others.  So, for this group, we are hosting a Zoom call on 24 Feb 2026 at 15:00 (GMT) for anyone with >5 years' experience in a senior sustainable investment role who is currently 'between jobs'.

Agenda:

• Introductions (30 mins)
• Breakout discussions on (30 mins)
  • Can AI save sustainable investment?
  • Integration into fundamental valuation: What have we learned?  What's next?
  • Winning the culture wars: How can we shape and present sustainable investment in a way that reaches through political noise?
• Presenting the opportunities arising and follow-up actions (30 mins)

Invitees:

On this call, we welcome anyone with >5 years' experience working in a senior sustainable investment role (from any point in the value chain: asset owner, investment consultant, asset manager, research provider, listed company or other) who is currently 'between jobs'.

People who have embarked upon 'one-man-band' consultancy projects are welcome to join.

Numbers are limited to 30 participants ... and we are going to be strict about the >5 year rule.  If the session works, we'll be happy to organise other sessions for others.

Network effect:

... and - just as importantly as solving the questions over the strategic direction of sustainable investment - will be an opportunity to share our capacity, objectives, opportunities and needs with each other.  There's plenty of work that needs doing in sustainable investment.  Hopefully, this call can start to match some of the opportunity with some of the capacity.

In the last couple of years, we have demanded increasing transparency from businesses about their climate impact. But it is becoming increasingly clear that while this increased transparency is good for investors, it can become really expensive, especially for smaller companies. The case of voluntary TCFD disclosure in the UK demonstrates this.

In the UK, companies were asked to disclose their climate-related risks, goals, and emissions along the guidelines of the Task Force for Climate-Related Disclosure (TCFD). From 2017 to 2021, this disclosure was voluntary, and since then, it has been made mandatory first for larger companies and increasingly for smaller companies as well....

Earth’s growing wobble is a little known climate signal investors may find concerning

And no, the Chandler wobble neither a new economic model nor a reference to the late Friends actor. It is recently alarming Earth system science investors should understand.

Part 1 — The science

Earth’s rotation axis “wobbles” (polar motion) because mass shifts continuously between land, ocean, and atmosphere. When large amounts of water move off continents and into the oceans, Earth’s mass distribution and moment of inertia change slightly and the pole shifts in response. So what we are seeing is potentially worse than the naturally occurring Chandler wobble.

Recent reporting summarising peer‑reviewed work links an early‑2000s step change in the pole’s position (about 45 cm) to a rapid global loss of soil water. A widely cited estimate suggests soils lost roughly 1,600 giga-tonnes of water in 2000–2002, with much of it ultimately reaching the oceans and adding around 1.95 mm/year to sea level during that short window.

The climate mechanism is intuitive: warming raises evaporative demand (more evapo-transpiration). If precipitation does not keep pace, terrestrial water storage declines and the oceans receive the net transfer.

Part 2 — Environmental and social impacts

A detectable pole shift is a reminder that land drying is systemic. Key impacts include:

• Drought amplification and ecosystem stress: feedback loops, vegetation loss, higher wildfire risk.
• Food and water security: lower yields, greater irrigation reliance, and groundwater draw down.
• Heat + water scarcity pressures: higher health risks, livelihood loss, and displacement in vulnerable regions.

Part 3 — Economic impacts

For investors, the “wobble” is a proxy for structural water risk — with implications for earnings, assets, and risk premia:

• Higher input and compliance costs in water‑intensive sectors (agri/food, beverages, semi-conductors, mining, textiles).
• More commodity and inflation volatility from drought‑linked supply shocks.
• Repricing of real assets and insurance where drought and wildfire risk persist; potential municipal strain from water capex.
• Supply chain disruption and reputational risk where firms compete with communities for scarce water.

The bottom line: persistent declines in land water storage can translate into durable constraints on production and habitability and therefore on cash flows and valuations.

At a time of macroeconomic and geopolitical uncertainty, our fifth annual ESG Global Study finds that most investors remain committed to considering ESG issues in the investment process.

Identifying investment opportunities is one of the top drivers for ESG adoption, and energy transition is one of three investment themes where more than half of global respondents say they have strong conviction.

This year’s survey also shines a light on how thinking about AI-related risks and opportunities is evolving. I’ll share a bit more detail on these topics below as well as a link to the full report for those who want to go deeper and explore many other fascinating global and regional findings. 

"If we look back at equities over recent history, markets have tended to move in decadal mega cycles, where one major ‘theme’ has dominated returns.

Being on the right side of these trends has proven extremely beneficial for investors. Over the past decade, one of the most pronounced trends has been the dominance of a select group of US-based, mega-cap technology companies. Supported by an environment of low interest rates, these companies have driven a substantial share of equity market returns, resulting in increasingly concentrated market leadership. However, that has begun to change as a new era of higher inflation and interest rates, and rising geopolitical tension, is marking the beginning of a prolonged shift, the scale of which we typically only see every 10 to 15 years.

What is particularly unique, and exciting for investors, about this current juncture is that there appears to be a confluence of transformational and multi-generational shifts occurring simultaneously. In this paper, we will discuss four key areas and examine how we are identifying the long-term investment opportunities that they present."

If there is one element that underpins the development of artificial intelligence and reindustrialisation of America, it might be electric power.

Power demand in the US is set to surge over the next decade, driven by rapid expansion of AI data centres, new manufacturing facilities and electric vehicle networks. Data centres account for about 4% of US electricity use, but estimates suggest that figure could climb to 9–14% by 2030.

Overall, what is unfolding is a fundamental shift for the power industry, which has undergone a decade of stagnant consumption.

Report here

Peter Michaelis and Simon Clements discuss the drivers of returns, the stock and asset allocation changes they have made, and where they see the opportunities for the SF managed funds.

Nestled in the heart of Britain’s forests, Center Parcs UK has become synonymous with family holidays that blend nature and leisure. With six villages across the UK and Ireland, each spanning around 400 acres of woodland, Center Parcs offers getaways that aim to promote biodiversity and sustainable living. Each village offers a range of self-catering accommodation, from apartments and lodges to luxury treehouses and a wide range of leisure activities. 

Center Parcs has been a long-standing holding in the sustainable fixed income funds. The business is owned by private equity company Brookfield Property Partners, a long-term, supportive shareholder, which was clearly evident during the Covid period, injecting capital into the business to help see it through those unprecedented and challenging times. 

The green bond market has experienced meaningful growth in recent years, offering fixed income investors a valuable means to support the climate transition.

However, as the market represents a relatively small share of global investment-grade debt, it can be challenging for investors to allocate to this asset class at scale – and in a way that doesn’t veer from benchmark performance and risk.

Lazard's 2025 LCOE+ report highlights that, despite headwinds and macroeconomic challenges, renewables remain the most cost-competitive form of new-build generation on an unsubsidized basis (i.e., without tax subsidies).

As such, renewable energy will continue to play a key role in the buildout of new power generation in the U.S. This is particularly true in the current high power demand environment, where renewables stand out as both the lowest-cost and quickest-to-deploy generation resource.

The report also emphasizes the need for diverse generation fleets to meet rising power demands, as well as the vital role system-wide planning and innovation will play in shaping a reliable and sustainable energy future. 

Lazard’s 2025 Review of Shareholder Activism highlights key trends and data in shareholder activism activity throughout the year.

Climate risk remains a key focus for regulators and investors, despite the apparent backlash against ESG considerations in some regions. The significance of climate risk is reinforced by existing and upcoming mandatory climate reporting requirements in various regions globally. 

This report evaluates all 29 global systemically important banks (G-SIBs) in terms of their preparedness for managing climate transition risks in alignment with evolving standards and regulations, providing an overview of key regulatory and reporting framework developments, and containing an assessment of the top-performing G-SIBs regarding climate governance, strategy and risk management. 

Key Insights:

• Norway is moving ahead with Arctic oil expansion, despite mounting ESG tensions. The APA 2025 licensing round expands acreage in the Barents and Norwegian Seas, even as other Arctic nations have paused or scaled back activity.
• Offshore activity intersects with particularly valuable and vulnerable areas that require “special caution” but lack legal protection or quantitative thresholds. This raises concerns about cumulative impacts as exploration pushes north.
• While Norway recognizes Indigenous rights and has ratified ILO Convention 169, licensing processes have historically excluded climate and petroleum objections from decision criteria. This underscores the complexity of balancing Indigenous rights, stakeholder participation, and energy development objectives in Norway’s Arctic.