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Economy

Climate change and the good adviser

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Anthony Hobley, global head of sustainability and climate change at legal firm Norton Rose Fulbright, and founder of Green & Tonic, a London-based network for sustainability professionals, writes about the importance of climate change for professional advisers.

This article originally appeared on Climasphere.

Are you a good adviser?

Knowing what we know about climate change what does it take to be a good adviser? Will we be asked if we knew? Will they say we should have known? They will almost certainly ask what we did to protect their interests. How will you answer?

Since OECD secretary-general Ángel Gurría gave his seminal lecture, Climate Challenge: Achieving Zero Emissions, at the London offices of Norton Rose Fulbright, I have been giving this question a lot of thought. Am I a good adviser?

Gurría contrasts our high level of awareness and understanding of climate risk with our lack of knowledge of the financial crisis, its impacts and consequences.

At his lecture, Gurria said, “If you had asked, in advance, those who oversaw the [financial] system that led to this train wreck whether they were comfortable living with risks on this scale and would happily pay the costs should they materialise, I suspect their answer would have been no. The risks were either not understood, or ignored.

Unlike the financial crisis, we do not have a climate bailout option up our sleeves. Interestingly, and despite all the press attention given to climate deniers, our understanding of the scale of the risk is much better developed than our understanding of the financial risks pre-crisis. It is not based on financial models but on several decades of extraordinary research.”

For professional advisers, what should and can we do to protect clients’ longer term interests in relation to climate change? Is it our duty to ignore the longer term and simply maximise their and our short-term returns before the inevitable crash? Or should we be looking to our clients longer term viability?

So what do we know as advisers? We know from the latest synthesis of the climate science by the Intergovernmental Panel on Climate Change’s (IPCC) Fifth Assessment Report (AR5) that if emissions continue to rise at the current rate, impacts by the end of the Ccentury are projected to include a global average temperature 2.6-4.8C higher than present.

This may not sound like much, but we know these are global averages and in practice could mean very dramatic differences in local temperatures and climate stability.

We know that each degree of temperature rise will bring ever more dramatic consequences in terms of sea level rises, access to water, food production, severe weather events and, as has been speculated recently, political stability. Critically, we know that almost without exception our clients’ business models are closely and precariously tuned to the historic climate, and we know that is changing and may change dramatically.

We also know that the agreement reached at Copenhagen in 2009 is to stabilise global average temperatures at 2C. We know many climate scientists think that even 2C is dangerous and higher than we should be risking.

We know that to have a better than two-thirds chance of limiting warming to less than 2C from pre-industrial levels, the total cumulative carbon dioxide emissions from all human sources since the start of the industrial era must be limited to about 1,000 gigatonnes of carbon. About half of this amount had already been burned by 2011.

If governments respond as they say they will, that effectively means that two-thirds of the currently identified fossil fuel reserves cannot be burned.

As Ángel Gurría so aptly put it, the choice is stark. As a business adviser I would rephrase that slightly. We know we have a choice between stranded assets affecting some business models, requiring them to adapt, or a stranded planet stranding most current business models with little hope of adapting.

It is increasingly clear to me that as a professional adviser, whether lawyer, banker, asset manager or financial adviser, our duty to our clients is to provide longer term advice on these risks and help them evaluate their business plans in light of these risks. If we fail to do so, we are not good advisers.

Anthony Hobley is global head of sustainability and climate change at legal firm Norton Rose Fulbright, and founder of Green & Tonic, a London-based network for sustainability professionals. This article originally appeared on Climasphere.

Further reading:

Investors want trustworthy, qualified and experienced financial advisers

Short-term financial planning apparent among 8 out of 10 non-advised individuals

Three-quarters of IFAs get requests for ethical investment options

Why the best financial advice includes ethical investment options

The Guide to Ethical & Sustainable Financial Advice 2013

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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