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Economy

A ‘hierarchy of investment needs’ for National Ethical Investment Week

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Many readers will be familiar with Maslow’s hierarchy of needs. This widely taught model suggests that humans achieve motivation in a series of stages, starting at basic physiological needs and peaking at self-actualisation. Abraham Maslow developed the theory in 1943 and it remains popular in sociology, management and psychology. The model could apply to investment.

Maslow’s argument was that each level of human needs had to be satisfied before progression to the next stage. He used this to describe how people are motivated in the 1954 book Motivation and Personality.

He argued that one cannot start thinking about ‘safety’ unless foundational ‘physiological’ needs being met (food, water, sleep and breathing). ‘Love and belonging’ of friends and family is built on ‘safety’. ‘Esteem’ and achievement is built on ‘safety’. ‘Self-actualisation’ (achieving one’s full potential), the highest state, is built on esteem, love/belonging, safety and firstly, physiological needs.

While new theories, such as attachment theory (dynamics of long-term relationships between humans), have become more widely accepted in recent years suggesting that the linear ranking and stages are not necessarily as sequential as Maslow argued, much of the thinking still applies.

It is useful way of thinking about all human activity.

The environment and its viability underpins everything. There is no society without a stable environment and no market economy without civil society – people buying and selling things under the rule of law.

Investment is framed in terms of the top level only, what is economic or profitable.

This is the beginning and end of the discussion for many politicians, investors, commentators and financial professionals. Any impact on society, individual people, the environment or planet are secondary or simply non-concerns.

This is a bizarre way of thinking about long-term investment and human activity. Everything we do economically and for profit is built on a stable society and a viable planet. It would be strange to undermine the foundations that hold our economy up to make a short-term gain while creating a long-term loss.

Blue & Green Tomorrow’s motto is, “All things are connected” (Omnia coniuncta). Actions in any of the economic, social and environmental systems interact and cause unpredictable reactions in the other systems. Every action has an equal and opposite reaction.

Sustainability is often presented in these terms. As overlapping, circles with equal weight.

What we do in economics (invest, consume, trade) shapes society and the environment – we make profit today, and create losses tomorrow.

What we do in society (vote, marry, have children, fight) shapes the economy and the environment – what provides pleasure today, will ensure pain tomorrow.

What we do to the environment (mine, pollute, degrade, make extinct, terraform or conserve) shapes the economy and the society – we exploit today, but will pay a heavy price in compensation tomorrow.

The hierarchy is a more useful model to understand how the earth functions.

Good economics, bad ecologic

It is this foundation environment level that is under the most extreme stress. Pollution, resource waste/scarcity and over-consumption all harm the viability of the environment and everything which is built on it. In turn, this environmental pressure is creating distress for societies around the world and is storing up another economic crisis.

Some ill-informed and reckless individuals may argue that we can’t compromise economic growth to save the planet. It makes more sense to argue that we cannot jeopardise the environment we all depend on at a fundamental level, simply to secure short-term profit and growth.

Don’t misunderstand. The Earth itself is not under threat.

This fragile, pale blue dot will endure and continue its orbit of the sun until it is consumed by an expanding star in about two billion years, or hit by another massive object before then. If you go back two billion years, multicellular life had just emerged, so we probably won’t be around anyway. It is us and our families, our way of life and all sentient life on Earth today which is under extreme threat from economic inhumanity to society and the environment.

It’s time for mankind to grow up and realise that what we do to the Earth and others, we do to ourselves. Most irresponsibly we do it to the generations to come.

The environment is at the bottom of our hierarchy of investment needs. It has society above it and is topped by economic and profit concerns. This represents the order of priority for many politicians, investors, commentators and financial professionals.

This is as wrong-headed as it is unsustainable, irresponsible, unethical and reckless.

In the words of Kenneth E Boulding in Future Environments of North America in 1966, “With laissez-faire and price atomic, Ecology’s Uneconomic, But with another kind of logic Economy’s Unecologic.”

 

National Ethical Investment Week 2013 runs from October 13-19. Join the debate on Twitter using the hashtag #moneydoinggood.

Further reading:

We need investment to return to its ‘patient evolutionary path’

Wisdom, ingenuity, morals and investing

There is a disconnect between investment and the real world

Ethical investors are not tree huggers, but air breathers (and responsible global citizens)

The Guide to Sustainable Investment 2013

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

Economy

Report: Green, Ethical and Socially Responsible Finance

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“The level of influence that ethical considerations have over consumer selection of financial services products and services is minimal, however, this is beginning to change. Younger consumers are more willing to pay extra for products provided by socially responsible companies.” Jessica Morley, Mintel’s Financial Services Analyst.

Consumer awareness of the impact consumerism has on society and the planet is increasing. In addition, the link between doing good and feeling good has never been clearer. Just 19% of people claim to not participate in any socially responsible activities.

As a result, the level of attention that people pay to the green and ethical claims made by products and providers is also increasing, meaning that such considerations play a greater role in the purchasing decision making process.

However, this is less true in the context of financial services, where people are much more concerned about the performance of a product rather than green and ethical factors. This is not to say, however, that they are not interested in the behaviour of financial service providers or in gaining more information about how firms behave responsibly.

This report focuses on why these consumer attitudes towards financial services providers exist and how they are changing. This includes examination of the wider economy and the current structure of the financial services sector.

Mintel’s exclusive consumer research looks at consumer participation in socially responsible activities, trust in the behaviour of financial services companies and attitudes towards green, ethical and socially responsible financial services products and providers. The report also considers consumer attitudes towards the social responsibilities of financial services firms and the green, ethical and socially responsible nature of new entrants.

There are some elements missing from this report, such as conducting socially responsible finance with OTC trading. We will cover these other topics in more detail in the future. You can research about Ameritrade if you want to know more ..

By this report today: call: 0203 416 4502 | email: iainooson[at]mintel.com

Report contents:

OVERVIEW
What you need to know
Report definition
EXECUTIVE SUMMARY
The market
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
The consumer
For financial products, performance is more important than principle
Competition from technology companies
Financial services firms perceived to be some of the least socially responsible
Repaying the social debt
Consumer trust is built on evidence
What we think
ISSUES AND INSIGHTS
Creating a more inclusive economy
The facts
The implications
Payments innovation helps fundraising go digital
The facts
The implications
The social debt of the financial crisis
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
PUTTING FINANCIAL SERVICES IN AN ETHICAL CONTEXT
An ethical economy
An ethical financial sector
Ethical financial services providers
GREEN, ETHICAL AND SOCIALLY RESPONSIBLE ISSUES IN FINANCIAL SERVICES
The role of investing
Divestment
The change potential of pensions
The role of trust
Greater transparency informs decisions
Learning from past mistakes
The role of innovation
Payments innovation: Improving financial inclusion
Competition from new entrants
The power of new money
The role of the consumer
Consumers empowered to make a change
Aligning products with self
THE CONSUMER – WHAT YOU NEED TO KNOW
For financial products, performance is more important than ethics
Financial services firms perceived to be some of the least socially responsible
Competition from technology companies
Repaying the social debt
Consumer trust is built on evidence
Overall trust levels are high
THE ETHICAL CONSUMER – SOCIALLY RESPONSIBLE ACTIVITIES
Payments innovation can boost charitable donations
Consumer engagement in socially responsible activities is high
Healthier finances make it easier to go green
SOCIALLY RESPONSIBLE COMPANIES
37% unable to identify socially responsible companies
Building societies seen to be more responsible than banks….
….whilst short-term loan companies are at the bottom of the pile
CONSUMER TRUST IN THE BEHAVIOUR OF FINANCIAL SERVICES COMPANIES
Overall trust levels are high
Tax avoidance remains a major concern
The divestment movement
Nationwide significantly more trusted
Trust levels remain high
CONSUMER ATTITUDES TOWARDS GREEN AND ETHICAL FINANCIAL PRODUCTS
For financial products, performance is more important than principle
Socially conscious consumers are more concerned
CONSUMER ATTITUDES TOWARDS TRANSPARENCY
Strategy reports provide little insight for consumers
Lack of clarity regarding corporate culture causes concern
Consumers want more information
THE ROLE OF FINANCIAL SERVICES FIRMS IN SOCIETY
The social debt of the financial crisis
THE SOCIAL RESPONSIBILITIES OF FINANCIAL SERVICES FIRMS
For consumers, financial services firms play larger economic role
Promoting financial responsibility
CHALLENGER COMPANIES AND SOCIAL RESPONSIBILITY
Consumer trust is built on evidence
The alternative opportunity
The target customer

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Economy

A Good Look At How Homes Will Become More Energy Efficient Soon

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energy efficient homes

Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.

There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.

1. The Rise Of Smart Windows

When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.

If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.

2. A Better Way To Cool Roofs

If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.

Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.

3. Low-E Windows Taking Over

It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.

They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.

4. Magnets Will Cool Fridges

Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.

The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.

5. Improving Our Current LEDs

Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.

That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.

Maybe Homes Will Look Different Too

Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.

ShutterStock – Stock photo ID: 613912244

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