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A new beginning for sustainable investment in the UK

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The UK’s sustainable investment industry has a new face among its leaders. Alex Blackburne spoke with Simon Howard, who on Tuesday began work as chief executive of the UK Sustainable Investment and Finance Association (UKSIF).

Around 24 hours ago, the sports world was rocked when Sir Alex Ferguson revealed his intention to step down as Manchester United manager at the end of the current season, ending his 26-year stint at the club.

Sir Alex’s successor, fellow Glaswegian David Moyes, has huge shoes to fill, and it remains to be seen if he will slip into them comfortably.

Rewinding 24 hours before Ferguson’s decision, though, the sustainable investment industry was embarking on a new era of its own – albeit one that is unlikely to generate as much interest as the goings-on at Old Trafford. However, its ramifications could well be far more significant.

The change in question is Simon Howard’s appointment as chief executive of UKSIF – the sector’s trade body. Howard – like Manchester United’s new boss – has similarly spacious footwear to fill.

He is replacing Penny Shepherd, who had led UKSIF since 2005. Under her management, the organisation, and sustainable investment more generally, made leaps forward, to the point where green and ethical retail investment now accounts for £11 billion in the UK, compared to just over £6 billion when she took over.

Shepherd was awarded an MBE in 2000 for “services to sustainable economic development and socially responsible investment”. She will remain at UKSIF in an advisory capacity until June.

We will achieve significant change more rapidly working with the system, working in the system, than perhaps protesting

But Howard, who has held senior roles at Liverpool Victoria, Friends Provident and 3i Asset Management, has experience in the sustainable finance sector through his role as head of sustainable financial markets at Forum for the Future. Having moved to replace Shepherd, he is well-equipped to continue her sterling work, but is, by his own admission, still relatively new to sustainability.

I was a conventional, mainstream investor and I became more and more aware of sustainability issues”, he says at the Hoxton Hotel in Shoreditch, just a few minutes’ walk from UKSIF – his new home.

I hope I’ve always been an investor rather than a speculator with a focus on the long-term. I was an equity man, and when I was buying shares, there was a reason for doing so – namely that you could see value being created in the long run.

The longer you push out your analysis looking for value, the more sustainability issues come to light.

At a personal level, I was a kind of unwilling convert to climate change because it clearly was ‘an inconvenient truth’ given what I was doing, but it’s undoubtedly happening, and that’s got to be factored in to how you view the world and what you do in it.

I’d done investment for 20 or so years and was ready for a change, so all of those things came together over the past few years to make me think that I wanted to do something in sustainability.”

He admits that sustainability crept up on him, rather than there being a road to Damascus moment. Shrinking ice cover in the Arctic; warmer and warmer summers; droughts in places that didn’t normally have droughts: just three of the signs that alerted him to climate change. This was a very real threat that needed to be tackled pragmatically but quickly.

Howard worked in mainstream investment for two decades. As is so often the case with people in the sustainability space, their experience with conventional finance and the slow pace of change is ultimately what encouraged him to take the leap.

But instead of sticking a sustainable carrot out to entice these people over to a different, more long-term way of thinking working in the sustainability sector, Howard explains that change needs to happen from within. Not so much making sustainable investment mainstream as making mainstream investment sustainable.

What we don’t necessarily want is loads of grey-haired men like me leaving the finance system to work with NGOs. What we want to do is to help the grey-haired men in influential positions in financial institutions stay there and make the increasingly commercially attractive move to enhanced sustainability, and I hope to do that”, he says.

We do need significant change, and the more rapidly it happens, the better. My view is that we will achieve that more rapidly working with the system, working in the system, than perhaps protesting.

So I’m very happy to be leading a trade body working with respected names throughout the whole gamut of investment and finance.”

Howard grew up in Warwick. His father was a librarian; his mother a teacher. He’s married to a doctor, has three children and lives in Cobham, Surrey.

People in finance are very bright, and the intellectual case for sustainability in investment and finance now seems so powerful that I think we will see changes coming

While the bulk of his career has been spent in investment and finance, his working life had rather different beginnings. After reading history at Durham, his first job was with Vaux, a local brewery located in the north-east. He then moved on to Allied Breweries in Surrey, before becoming the firm’s area manager for Kent.

His job was to work with tenants – the entrepreneurs who rented the pubs from the brewery. But when the monopolies and mergers commission came along in the late 80s, it was clear that this structure was under threat. Howard swiftly left.

He completed a master’s in business administration (MBA) and became interested in how the City worked. In 1990, he began his City career in the investment management arm of RBS. In 1994 he joined 3i and in 2002 became managing director of 3i Asset Management. Since then he has been head of investments at Friends Provident and group chief investment officer at Liverpool Victoria.

One of his first jobs as UKSIF chief executive is to review the organisation’s near-term and long-term strategies.

I  want to talk to as many members as I possibly can, and find out what it is they want and how well they think we’re doing”, Howard says.

I will then take that to our board, discuss that in the context of what we and the board think needs to be done, and see where there’s a good overlap.

The strategy review is going to be inclusive. We have limited resources; we need to focus them where can we do most good for our cause and our members.”

John Ditchfield, co-chair of the Ethical Investment Association (EIA) and managing partner at financial advisory firm Barchester Green – who also sits on UKSIF’s board – said recently that asking about ethical values “should be integral to the know-your-client process” for financial advisers. Howard agrees.

Advisers play an absolutely key role [in encouraging sustainable investment]”, he says.

This is something that we think advisers should be asking their clients – probing them on what they want. Someone who is maybe trying to live a sustainable life and is conscious they need to save for a pension may simply not know there are sustainable pension savings options available.

In a sense, we need the adviser to offer them the option and to raise that topic. I think there’s an education role for member organisations like UKSIF. It’s a big job; a big piece of work to do.”

But serious investment advice is, more often than not, focused on a smaller wealthy minority. Therefore, Howard says, we need to come up with a way of encouraging the majority to move their money to sustainable options.

National Ethical Investment Week, which is in its sixth year in 2013, is just one of the many avenues that UKSIF is using to spread the word about the industry.

I think the case [for sustainable investment] is so overwhelming that it will eventually happen naturally but that could well be too late and so we need to push”, Howard explains.

I sense a lot of this –sensible fact based arguments linked to diversification, new areas of growth and liability matching,  that make a strong case for sustainable investment for institutional and retail investors- is out there just off stage. But each month and each year that passes makes it clear it’s not going to go away. It’s not a fashion which someone can ignore. It is the future; it’s going to have to be considered by anyone managing or owning assets.

I think the tide could be beginning to run our way. People in finance, it seems to me, are very bright, and the intellectual case for sustainability and in particular, sustainability in investment and finance, now seems so powerful that I think we will see changes coming.

This aim of making it mainstream is a realistic aim, and is one that we should all work towards. And I think we can do it.”

Further reading:

New chief executive unveiled for sustainable investment trade body

Understanding how your savings and investments are used is integral to sustainability

The dynamic future of sustainable investment

$13.6tn invested sustainably worldwide, says study

The Guide to Sustainable Investment 2013

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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