Climate-related issues and social responsibility are becoming more and more of an issue of interest for investors, and events like the UN Conference of Parties (COP) in Glasgow last week are helping to focus attention on the link between climate and social issues and daily decisions, including financial investment.
For investors trying to decide where to invest responsibly there is an overload of information. Companies are producing glossy brochures and reams of statements on their commitments to social responsibility, but it is actually really hard to find out if they are genuinely walking the walk. The real information is buried deep inside annual reports and takes a lot of time to analyse.
This is about to change as start up Etcho launches an app that will allow investors to check the sustainability credentials of a company, and then decide if they want to invest.
The app lists all the 17 United Nations Sustainable Development Goals (SDG) ranging from no poverty and zero hunger to decent work and economic growth and analyses how a company is performing against those goals. Investors can pick the SDGs they are most interested in and the app will show them companies that line up with those goals. The app doesn’t suggest trades, the decision is down to each individual investor. The full list of SDGs is at the end of this article.
Etcho’s app is filling a tangible gap in the investment space, particularly for a younger generation of investors who are keen to align their investments with their world views. With simple visuals and easy access on the phone the app makes it possible to quickly analyse the score of a company against specific SDGs. A company may or may not satisfy those goals – and in fact, at present, no single company fulfils all 17 goals – but after the scoring investors will be able to make their own informed trading decision.
Who is behind Etcho?
The two founders, both passionate about sustainability, have a track record in this type of analysis. Liall Medina comes from Standard & Poor’s where he previously worked on ESG analysis for major financial institutions, while Charlie French gained ample experience in this field during his time with the United Nations agency UNICEF. There he worked with global corporations on strategies to achieve their SDGs.
“Both Charlie and I have a passion for positive impact … and we were getting frustrated with the lack of urgency and the speed at which we are getting there,” said Medina. He notes that while there are a few trading apps on the market looking at sustainable investments, they typically allow investors to choose a fund to invest in rather than the actual companies. The final trading decision still rests with the fund manger. Etcho’s app aims to bring down that barrier.
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Etcho managed to raise in excess of £275,000 in its current fundraising round, both from angel investors and crowdfunding on Crowdcube, exceeding the firm’s £175,000 target. The Crowdcube fundraising closes at midnight tonight.
The team plans two iterations of the app. The first, to be launched early next year, will have SDG scoring, while the second will be an actual trading app. Initially the app will include a considerable number of US-listed equities but will eventually extend to cover companies across the globe.
“We have data on thousands of companies, large, medium and small, but we will be launching with a smaller universe of companies,” explains French. The decision on which companies to include in the app will depend on investors’ interest, which will be gauged in the first phase of the app. The app will list not only sustainable companies but non-sustainable ones to, allowing investors access to SDG-relevant information.
The 17 UN sustainable development goals
- No Poverty
- Zero Hunger
- Good Health and Well-being
- Quality Education
- Gender Equality
- Clean Water and Sanitation
- Affordable and Clean Energy
- Decent Work and Economic Growth
- Industry, Innovation and infrastructure
- Reduced inequality
- Sustainable Cities and Communities
- Responsible Consumption and Production
- Climate Action
- Life Below Water
- Life on Land
- Peace and Justice Strong Institutions
- Partnerships to achieve the Goals