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Bringing social investment into the mainstream

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Will the launch of Threadneedle’s Social Bond fund bring social investment into the mainstream?

Getting acceptable financial returns while creating tangible social outcomes is arguably the holy grail for socially-minded investors. Surveys suggest demand for products that balance financial and social returns, the so-called ‘double bottom line’, is high. Sustainable bank Triodos reported last year that nearly 3 million investors could consider social investment in 2014.

The challenge for some social investment products is that their rates of return are simply not that compelling for the mainstream. For investors motivated by the core social aspect of this type of investment, this may not be a major problem; they’re happy making a smaller return if they know their money is actively doing some good. Many bond-style products also lack liquidity – meaning investors’ money is locked up for fixed terms, and they can’t convert their investments into cash very easily.

But there is a new fund on the market that aims to address both of these potential barriers. Threadneedle Investments – which has nearly £90 billion in funds under management – says its UK Social Bond fund is the first social investment fund with daily liquidity, allowing investors to take out their returns anytime they want.

Launched with an initial investment of £10m from social investment bank Big Society Capital, the fund has been developed in partnership with Big Issue Invest – the Big Issue magazine’s investment arm which now acts as social adviser to the fund.

Part of the fund’s earnings goes towards helping Big Issue Invest in its work financing social enterprises, adding more social value to any potential investment. Meanwhile, Threadneedle will contribute a portion of its fee to the Threadneedle Foundation, a dedicated entity through which the company provides support for charitable activities.

The fund has a strong emphasis on social housing, which makes up a quarter of its holdings, while healthcare and education are also represented well. There are sectors that it invests in – for example financial services and utilities – which may not be, on the face of it, ‘social’ investments. However, fund manager Simon Bond justifies this by saying the fund’s impact on the economy is social and its geographical focus is firmly on the regions – and not on areas already faring well economically.

Speaking at a launch event for the fund at Southwark Cathedral last week, Bond addressed the misconception that investing with social, ethical or sustainability factors in mind automatically brought about lower returns.

We don’t believe that you do have to give up financial return to achieve social aims. We didn’t believe it when we put the model for the portfolio together and we don’t believe it two months in”, he said.

We think there are examples out there whereby you can have both – you can have your cake and eat it.”

He was also asked whether he had taken any lessons from the socially responsible investment (SRI) world, which the mainstream investment community often looks at with some cynicism.

He said, “Cynicism does exist. That is a concept we have come across, funnily enough. And it’s something that we have to deal with every day. I think the way that you deal with cynicism is you deal with it in a very calm, measured manner, and you quietly sit down and explain exactly what it is you’re trying to do.”

Meanwhile, Sarah Forster of Big Issue Invest, who was heavily involved in creating the UK Social Bond fund, added that mainstream institutions were generally not interested in social ventures. To get their attention, she said that there was clearly a need for “a product that had credible social value creation but also would meet the liquidity and yield demands from the market”.

This lack of products is hampering the market’s growth. In a panel discussion at the Threadneedle event, Alexander Hoare – a partner at the private bank C Hoare & Co – said he had written to 10,000 wealthy customers inviting them to express an interesting in social investment. Just four replied. That said, he explained that it was very much a “chicken and egg” scenario, in that as more products are introduced, this would be met with increased demand.

Bond agreed, adding, “Partly, we’re launching this fund in order to prove that demand is out there. Build it and they will come.”

Hoare added that part of the problem – and indeed, much of the sector’s growth – rested on the shoulders of financial advisers who were advising interested clients.

He recalled a conversation with people from a discretionary portfolio management firm, in which he asked whether social investment could be included in their clients’ portfolios. They responded by reeling off concerns to do with risk, returns, liquidity and regulation. A similar meeting with a group of independent financial planners was also unsuccessful.

These two communities, plus a range of others, still need convincing about what social investment offers. In theory, investors may want their money to do good, but if their advisers are preventing them from doing so, the sector’s growth is stunted. This is exactly the reason why Blue & Green Tomorrow is doing a series of sustainable investment bootcamps in 2014, specifically educating financial advisers about the benefits of investing this way.

While the launch of the Threadneedle UK Social Bond fund is by no means the sole answer to mainstreaming social investment, it could be the catalyst the industry needs – but only if it performs how its managers suggest it will perform, both financially and socially. A failure on either of these aspects could damage the sector’s reputation.

Ultimately, we need a whole host of similar products to truly make the sector a viable investment for the mainstream. Speaking at the Southwark Cathedral event last week, Big Issue Invest chief executive Nigel Kershaw (pictured) described social investment as “finance to transform society”. This may sound grandiose, but in actual fact it is an accurate and exciting tagline for a sector whose time in the spotlight appears very close indeed.

In accordance with the Financial Services and Markets Act 2000, Blue & Green Communications Limited does not provide regulated investment services of any kind, and is not authorised to do so. Nothing in this article and all parts herein constitute or should be deemed to constitute advice, recommendation, or 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.

Further reading:

Threadneedle and Big Issue Invest join forces for UK Social Bond fund

Investors to be given opportunity to invest in Big Society

Fiona Woolf: London must lead in social impact investment

Sir Ronald Cohen: measuring of social investment outcomes a ‘breakthrough’

Cameron: ‘social investment can be a great force for social change on the planet’

Features

Ways Green Preppers Are Trying to Protect their Privacy

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Environmental activists are not given the admiration that they deserve. A recent poll by Gallup found that a whopping 32% of Americans still doubt the existence of global warming. The government’s attitude is even worse.

Many global warming activists and green preppers have raised the alarm bell on climate change over the past few years. Government officials have taken notice and begun tracking their activity online. Even former National Guard officers have admitted that green preppers and climate activists are being targeted for terrorist watchlists.

Of course, the extent of their surveillance depends on the context of activism. People that make benign claims about climate change are unlikely to end up on a watchlist, although it is possible if they make allusions to their disdain of the government. However, even the most pacifistic and well intentioned environmental activists may unwittingly trigger some algorithm and be on the wrong side of a criminal investigation.

How could something like this happen? Here are some possibilities:

  • They could share a post on social media from a climate extremist group or another individual on the climate watchlist.
  • They could overly politicize their social media content, such as being highly critical of the president.
  • They could use figures of speech that may be misinterpreted as threats.
  • They might praise the goals of a climate change extremist organization that as previously resorted to violence, even if they don’t condone the actual means.

Preppers and environmental activists must do everything in their power to protect their privacy. Failing to do so could cost them their reputation, future career opportunities or even their freedom. Here are some ways that they are contacting themselves.

Living Off the Grid and Only Venturing to Civilization for Online Use

The more digital footprints you leave behind, the greater attention you draw. People that hold controversial views on environmentalism or doomsday prepping must minimize their digital paper trail.

Living off the grid is probably the best way to protect your privacy. You can make occasional trips to town to use the Wi-Fi and stock up on supplies.

Know the Surveillance Policies of Public Wi-Fi Providers

Using Wi-Fi away from your home can be a good way to protect your privacy.However, choosing the right public Wi-Fi providers is going to be very important.

Keep in mind that some corporate coffee shops such a Starbucks can store tapes for up to 60 days. Mom and pop businesses don’t have the technology nor the interest to store them that long. They generally store tips for only 24 hours and delete them afterwards. This gives you a good window of opportunity to post your thoughts on climate change without being detected.

Always use a VPN with a No Logging Policy

Using a VPN is one of the best ways to protect your online privacy. However, some of these providers do a much better job than others. What is a VPN and what should you look for when choosing one? Here are some things to look for when making a selection:

  • Make sure they are based in a country that has strict laws on protecting user privacy. VPNs that are based out of Switzerland, Panama for the British Virgin Islands are always good bets.
  • Look for VPN that has a strict no logging policy. Some VPNs will actually track the websites that you visit, which almost entirely defeats the purpose. Most obviously much better than this, but many also track Your connections and logging data. You want to use a VPN that doesn’t keep any logs at all.
  • Try to choose a VPN that has an Internet kill switch. This means that all content will stop serving if your VPN connection drops, which prevents your personal data from leaking out of the VPN tunnel.

You will be much safer if you use a high-quality VPN consistently, especially if you have controversial views on climate related issues or doomsday prepping.

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Features

How Going Green Can Save Your Business Thousands

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Running a company isn’t easy. From reporting wages in an efficient way to meeting deadlines and targets, there’s always something to think about – with green business ideas giving entrepreneurs something extra to ponder. While environmental issues may not be at the forefront of your mind right now, it could save your business thousands, so let’s delve deeper into this issue.

Small waste adds up over time

A computer left on overnight might not seem like the end of the world, right? Sure, it’s a rather minor issue compared to losing a client or being refused a loan – but small waste adds up over time. Conserving energy is an effective money saver, so to hold onto that hard-earned cash, try to:

  • Turn all electrical gadgets off at the socket rather than leaving them on standby as the latter can crank up your energy bill without you even realizing.
  • Switch all lights off when you exit a room and try switching to halogen incandescent light bulbs, compact fluorescent lamps or light emitting diodes as these can use up to 80 per cent less energy than traditional incandescent and are therefore more efficient.
  • Replace outdated appliances with their greener counterparts. Energy Star appliances have labels which help you to understand their energy requirements over time.
  • Draught-proof your premises as sealing up leaks could slash your energy bills by 30 per cent.

Going electronic has significant benefits

If you don’t want to be buried under a mountain of paperwork, why not opt for digital documents instead of printing everything out? Not only will this save a lot of money on paper and ink but it will also conserve energy and help protect the planet. You may even be entitled to one of the many tax breaks and grants issued to organizations committed to achieving their environmental goals. This is particularly good news for start-ups with limited funds as the Environment Protection Agency (EPA) is keen to support companies opening up their company in a green manner.

Of course, if you’re used to handing out brochures and leaflets at every company meeting or printing out newsletters whenever you get the chance, going electronic may be a challenge – but here are some things you can try:

  • Using PowerPoint presentations not printouts
  • Communicating via instant messenger apps or email
  • Using financial software to manage your books
  • Downloading accounting software to keep track of figures
  • Arranging digital feedback and review forms
  • Making the most of Google Docs

Going green can help you to make money too

Going green and environmental stability is big news at the moment with many companies doing their bit for the environment. While implementing eco-friendly strategies will certainly save you money, reducing your carbon footprint could also make you a few bucks too. How? Well, consumers care about what brands are doing more than ever before, with many deliberately siding with those who are implementing green policies. Essentially, doing your bit for the environment is a PR dream as it allows you to talk about what everyone wants to hear.

Going green can certainly save your money but it should also improve your reputation too and give you a platform to promote your business.

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