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Britain’s oldest bank sets sights on sustainable investment

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Three hundred and forty-two years into its existence, C Hoare & Co is casting a keen eye on sustainability, writes Alex Blackburne.

The 10,000 customers of Hoare’s Bank, one of London’s most distinguished private banks, were sent a letter in February that – among other things – raised the topic of sustainable investing.

Any customers who would like to participate in focus groups of this nature should contact me”, wrote Alexander Hoare – the 11th generation of his family to have run the bank. Just five people replied.

Admittedly, the letter was mixed in with each customer’s statement – so it would be fair to assume that many perhaps haven’t yet read it. But could the poor response rate actually be a reflection of the general lack of enthusiasm for sustainable investment? Hoare doesn’t think so.

Our customers are entirely happy”, he says.

I met those who responded to that appeal and their message was that they kind of expect Hoare’s Bank to do the right thing and not really make a big song and dance about it – just get on and do it.”

The bank’s story is one of quiet leadership. Hoare stepped down as chief executive in 2009, handing the job over to Jeremy Marshall, formerly of Credit Suisse, who is the first non-family member to hold the role. It has since recorded record profits – despite a stated aim not to maximise returns.

It’s a neat little formula – you don’t try to maximise profits and you find it’s quite profitable”, Hoare adds, speaking from the bank’s grand office in London’s Square Mile. Complete with black and white floor tiles and glass cabinets housing old books, it serves as a reminder of the bank’s esteemed history.

Alexander Hoare, the 11th generation of his family to run Hoare's Bank.

Hoare’s is owned by seven partners – all members of the Hoare family, with the eldest, Henry, celebrating his 62nd year of service this year. All seven are in joint and several unlimited liability for everything they do – essentially meaning if one gets into financial bother, they all take the flak. Meanwhile, it also gives away around 10% of its profits to its charity, the Golden Bottle Trust.

Alexander Hoare says, “We want to hand a bank that is simple, small enough to understand and safe to the next generation. Along the way, we don’t want any toxic derivatives, we don’t want to rig any benchmarks or rates, we don’t want to launder any money in Mexico or Iran, we don’t want to mis-sell any complex products to our customers.

Actually, that works quite well for the customers, the staff and the owners.”

This custodianship of customers’ deposits has remained constant since Richard Hoare, Alexander’s direct ancestor, set up the bank in 1672. Its 342-year history makes it Britain’s oldest bank, and the fifth globally.

Early clients included Samuel Pepys – most famous for his decade-long diary – as well as the poet Lord Byron and acclaimed author Jane Austen.

And while the technology of banking has clearly changed since the bank’s 17th century origin, Hoare says the principles that his forefathers enshrined in it are still evident.

You take money in, you keep it safe and you’re able to give it back when customers want it. And then, along the way, you’ve got to find a way to pay the bills – so you lend it carefully and sustainably. That hasn’t changed”, he explains.

What also hasn’t changed is its policy on who it lends to. Hoare says the bank has never lent money to anybody to “raid the Earth, poison the air and pollute the waters”. Customers typically have to have assets of £1m and be introduced by someone familiar to the bank already – but a common theme running through all 10,000 is one of stewardship for future generations.

The bank has big plans to shake up its investment arm. Hoare says it is going to scrap the ethical service it has offered for a number of years (“it was always a sideshow to the main service”) and instead make the main service compliant with environmental, social and governance (ESG) analysis.

It began the year-long process two months ago and by the end of it, hopes to have enough data to justify implementing ESG across the board.

I’m excited by it”, says Hoare, who has become the bank’s sustainability champion in recent times – a belief that stems from the Golden Bottle Trust. Over £1m a year now flows into the charity, which focuses on the arts, community, education, wildlife, health and the developing world.

After reading Banker To the Poor, the 2006 autobiography by Nobel peace prize-winner Muhammad Yunus, Hoare began to see the synergy between making money in financial services in London and giving back financial services to excluded people in India and Africa.

On top of charitable projects, the Golden Bottle Trust also has around a dozen impact investments. In each case, the charity expects to get its money back – while also doing good on the ground.

I see impact investment as a way of getting a person’s money doing something they care about. Another way of saying the same thing is that there’s a disillusionment with the social uselessness of much of financial markets, and it is an alternative approach to financing things. It holds quite a lot of promise”, he says.

Asked if he ever felt like a lone ranger within the bank, he adds, “It is the job of leaders to lead from the front sometimes.” He mentioned the growing momentum from younger staff, who find the topic particularly interesting.

Three hundred and forty-two years into its existence, C Hoare & Co’s philosophy of customer-orientated banking has stood the test of time. And Alexander Hoare thinks the 11 generations before him would have approved.

On sustainability, they created some amazing landed estates, beautiful stewardship of the countryside. On financial management, they’ve always stuck close to their money. They’ve only ever done what they believed to be right – and we’re still in the game 300 years later. It seems to work.”

Further reading:

Bringing social investment into the mainstream

Fiona Woolf: London must lead in social impact investment

Growing ranks of high net-worths committed to social investment

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

The Guide to Sustainable Investment 2014

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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