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3D five star fund Triodos Sustainable Pioneer: the 3D Investing perspective

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During Good Money Week Blue & Green Tomorrow launched 3D Investing’s 5-Star rating system which allows advisers and investors to pick out the best of the best from the socially responsible investment universe. To find out more read the B&GT Guide to Sustainable Investment or visit 3Dinvesting.com. Today we take a look at the Triodos Sustainable Pioneer Fund.

Triodos is known as a real pioneer in sustainable investing, chiefly through its banking operations. This fund invests in small and medium sized companies that fall into one of four themes – sustainable energy, medical technology, environmental technology and corporate social responsibility pioneers. The quality of the social research, transparency of communications and the ethos of the fund are second to none.

Although the fund is a relatively recent launch in the UK, it has been available in the Netherlands since 2007. Since launch in the UK, performance relative to its benchmark has been average, although over the longer term, the original share class has underperformed the composite index. We have a very high level of confidence in Triodos and the fund provides exposure to smaller/mid cap global companies in four key areas. The quality of the research, level of transparency and thematic approach, combined with a decent fund management team make this a five star fund.

Investment Strategy & Fund Composition

This is a smaller companies fund, wholly focused on four themes. The first of these is healthy people which includes companies offering solutions for health care issues, such as medical technology, drugs aimed at curing diseases in developing countries, clean drinking water and innovative health care. Other relevant activities include medicines based on natural ingredients and organic food production.

The clean planet theme embraces environmental technologies aimed at combating pollution and cleaning up the earth including companies that specialize in recording environmental pollution and energy consumption. The climate protection theme covers clean energy, energy efficiency and LED lighting, whilst the CSR pioneer theme largely relates to packaging companies (that use a high recycled content) and organic food retailers.

Two thirds of the fund is invested in North America with the majority of the remainder in Europe.

Ethical Approach & Suitability

Minimum ethical standards are applied to the fund, and in particular, coal, nuclear energy, unconventional gas and oil, and components of weapons are avoided. However, the wholesale focus on the four social and environmental themes (see below) is what distinguishes the fund. Each holding has to derive at least 50% of its revenues from one of the prescribed activities. There are no contentious holdings and the fund is likely to prove ethically desirable for the vast majority of investors.

Sustainability analyses are also used to enter into a dialogue with companies. In order to stimulate companies to improve their sustainability performance, Triodos Sustainability Research uses this dialogue to raise awareness, convince others and to motivate change.

The fund has no contentious holdings.

SRI Capability & Management

Triodos is known for its ethical banking operations in Western Europe but it has been developing its investment management offering to include listed equity investments since the early 1990s. The fund is offered by Triodos Bank direct to its retail customers and is advised by Triodos Investment Management, a wholly owned subsidiary of the bank that is now responsible for €2.6 billion in assets under management. It is one of the leading exponents of sustainable, thematic investing, with a wealth of expertise and resources at its command. Triodos constructs the investment universe from which its chosen fund manager selects stocks and is particularly rigorous in assessing companies and understanding the concerns of investors. The level of transparency is exceptionally high with all stocks being profiled, and not only those held, but also each potential investment in the investment universe. Furthermore, the engagement activity is fully documented by way of engagement and proxy voting reports and these are not just confined to corporate governance, but look at other wide ranging ethical issues.

Social Impact

All of the fund is invested in companies that have a direct social or environmental benefit giving it the highest rating. All of the underlying investments represent the purchase of shares in quoted companies and capital is not, by and large, directly enabling new social or environmental initiatives. However, the fund does finance some smaller innovative companies and capital invested does continue to finance socially beneficial companies. Key social impacts are in line with the themes of the fund, that is, healthier people, climate protection and a cleaner planet.

Risk Management

The fund is well diversified with more than 60 holdings. The average market capitalisation is lower than comparable funds, which would generally indicate a higher level of risk, and this is borne out by a level of volatility that is a little higher than other global thematic funds. Investments are held in local currencies and this risk is unhedged.

Transparency

Triodos is exemplary in the level of transparency and communication of its engagement and investment strategies. The reasoning for inclusion of each holding is made publicly available, as are the results of any sustainability analyses and dialogue with companies. Triodos actively seeks to improve the sustainability performance of its holdings through active dialogue and it benchmarks company performance on a range of sustainability issues to identify areas of strength and weakness. Triodos then aims to convince investee companies of the need for change and will work with them to achieve this.

Financial Performance & Management

The fund is managed by Delta Lloyd, a boutique fund manager in the Netherlands. Delta Lloyd adopts a distinctive style, generally investing in 25-35 companies in which it holds substantial positions and has a close relationship.
The objective is to invest in shares which the manager considers to be worth 30 – 50% more than the current market capitalisation, giving them a valuation safety margin. In the case of the Triodos Fund, more stocks are held to reduce stock specific risk. The fund is measured against a composite benchmark comprising clean energy, environmental, healthcare and small company indices. Sterling share classes were only established in the UK in April 2013, but the fund has a track record going back to 2007, since when the fund has performed largely in line with the composite benchmark.

In accordance with the Financial Services and Markets Act 2000, Blue and Green Communications Limited does not provide regulated investment services of any kind, and is not authorised to do so. Nothing in this magazine and all parts herein constitutes or should be deemed to constitute advice, recommendation, invitation or inducement to buy, sell, subscribe for or underwrite any investment of any kind. Any specific investment-related queries or concerns should be directed to a fully qualified financial adviser.

Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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