In their zeal to remove emissions from their portfolios, many investors focused on sustainability treat commodities with skepticism. Although such skepticism is merited in some cases, commodities will remain an essential component of the economy, and investors should note that there is no transition pathway to a climate-neutral world that does not involve commodities.
Humanity must replace its significant and often inappropriate use of commodities with good and innovative stewardship of the natural world, lest our finite natural resources be exhausted. Responsible investors should rightly consider looking at commodity-related investments, but do so with a keen eye for improving sustainability.
In this paper, we provide some guidance on good stewardship as an investor in different commodity sectors. We also delve deeper into the controversy surrounding the use of futures to access commodities.