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Ethex: empowering education into ethical investment

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Jamie Hartzell is the definition of an entrepreneur. He arrives at his latest venture, Ethex, a non-profit that gives information on ethical investment, after a career that encompasses filmmaking, philanthropy and property. He spoke to Alex Blackburne about how he now hopes to help people reinstall power into their finances.

Investment can be complicated. Indeed, a mere mention of derivatives, mutual funds and asset classes is often enough to turn many people’s blinders on.

For every $1 of real goods and services produced, $26 is traded financially, but the global investment industry’s complexity frequently masks its impact, in that most people simply aren’t aware of what damage their money might be doing to the planet and its resources.

But this applies for ethical investments, too. Just as investors are often oblivious to the bad things that are happening behind the scenes, they’re also unaware of the good things. This is where Jamie Hartzell comes in.

He’s launched Ethex, a not-for-profit organisation that lays out information about ethical investment in simple terms. It profiles the social, environmental and historical investment performance of a number of businesses – whether it’s fair trade organisations, community renewables projects, firms working in social property or ethical banks – with the aim of encouraging more people to think differently about where their money might be invested.

We include any business that has a very clear positive benefit at the heart of their mission”, explains Hartzell.

If we continue the way we are, where business considers only the amount of profit it makes and not the social and environmental impact of its activities, we’re heading down a very increasingly steep and slippery slope

As well as this, we would also expect them to conform to a set of ethical criteria and to be working to improve those criteria.

So, what are their carbon emissions as an organisation? How many women do they have on their board? Is the pay of their chief executive excessive compared to the lowest paid people in the organisation? There is a range of criteria that we’d be presenting.”

An environmental filmmaker for much of the 1980s and ‘90s, Hartzell is perhaps best known for founding the Ethical Property Company, an organisation that buys properties and transforms them into ethical service centres for non-profit organisations and social enterprises. Launched in 1998, it now has nearly 20 centres across the UK, with sister companies in France, Belgium and the Netherlands.

With the Ethical Property Company at a mature stage, Hartzell decided to step back in the spring and devote his time to Ethex.

Our aim is to get as many people as possible investing truly ethically”, he says of the organisation’s aim.

How many people that will be is quite a hard one to call but the existing Ethex member businesses already have 45,000 investments in total.

That’s already quite a substantial working base to start from and I think there is more and more interest.

People are getting a lot more active, particularly since the Libor scandal, to switch their accounts. So there are a lot of possibilities out there if we can access them.”

Hartzell is right. In the week immediately after the Libor rate-fixing scandal came into the public eye, dedicated ethical banks across the UK were inundated with interest from potentially new customers.

Triodos Bank received a 51% surge in account applications and opened three times as many accounts than normal on the day that former Barclays chief executive Bob Diamond announced his resignation in July. Meanwhile looking further back, Charity Bank revealed that it had welcomed 440 new customers between January 1 and June 30 this year – a figure 300 more than the same period in 2011.

It’s this kind of action from customers and investors that leads Hartzell to believe there is a significant gap in the market for the service that Ethex provides.

People are rather disempowered and disillusioned when it comes to finance.

We’ve had so many scandals and abuse cases over the last 15-20 years; I think people are deeply distrustful now of the financial system. They don’t really know what they can do.

They think the situation is out of their hands and that all the power is in the City so they don’t really have access to it. They might also see finance as complex and difficult to understand.

What we want to do really is make it much easier for people to reengage with their money and help them to think about what it is they would like to do with their money in order to make a difference and help us get out of the mess we’re in.”

Investments shape which industries are profitable and which are not. But at the same time, the uptake of dedicated ethical, sustainable or green funds in the UK is still microscopic compared to the huge rollout of conventional funds.

Hartzell places the reason for this as a lack of investor and adviser knowledge and a reticence to think that it’s something that we can control, when in reality, we can.

Our aim is to get as many people as possible investing truly ethically

I suppose you can parallel it to the growing popularity of ethical consumerism and fair trade”, he explains.

For a long time, people were saying that they can’t make these choices and they just had to buy certain stuff, whether it came from South Africa or exploited farmers, but I think that’s now quite well-established and you can make those choices yourself.

People don’t look at investment in that way. Intermediaries and regulators aren’t necessarily helping in that regard, as they’re often acting on somebody else’s behalf, so they’re much more prone to try to put you off because it doesn’t tick any of the right boxes.

He adds that something has to change. And without scaremongering, it has to change fast.

If we continue the way we are, where business considers only the amount of profit it makes and not the social and environmental impact of its activities, we’re heading down a very increasingly steep and slippery slope.

There can’t be any greater irony than how the melting of the Arctic ice caps is merely encouraging further oil and gas exploration in those areas, because it’s now easier to do.

It seems to me that we have no choice, to ultimately end up with a society where a generation of profits also means a better society and a better environment.”

The profit-driven ideology that engulfs the financial services industry is one of the reasons Hartzell decided to go down the not-for-profit route for Ethex – which he says is an integral part of the organisation’s business model. He goes on to state two reasons why it was imperative he opted for this direction.

There’s a regulatory reason which is being not-for-profit makes it easier for us to operate in the regulatory environment, because we can’t financially benefit from what we’re doing.

But we also think that it is highly appropriate. Looking at what’s happening in terms of public trust in intermediaries and the cynicism over the levels of fees being charged, rogue trading scandals, mutual fund scandals, Libor-rate fixing scandals – all that has been done in the name of profit really, be it personal or institutional greed.

We’re looking at really introducing a non-profit element into finance, and we’re setting up a non-profit broker service effectively in transferable shares.

As far as we’re aware, I don’t think there has been a non-profit brokering service ever before. We think that just really helps to demonstrate to people why we’re doing things.”

For the time being, Ethex is funded by a combination of grants and loans from foundations. But eventually, it will be generating its own income from the businesses included on its website, through transaction and membership fees.

Everything about the business model points towards it being successful. Hartzell has tapped into an industry that desperately needs to outline information in a clear and simple fashion for ethical investors.

The most important action, however, needs to come from you. And after seeing the overwhelming social, environmental and financial benefits many of these companies and funds have to offer, you’d be foolish not to act upon it.

Further reading:

Investing ethically is a process with ‘intrinsic benefits’

Ethical investment, responsible investment, sustainable investment, impact investment: what’s in a name?

National Ethical Investment Week: one month countdown

The dynamic future of sustainable investment

The Guide to Sustainable Investment

Editors Choice

2017 Was the Most Expensive Year Ever for U.S. Natural Disaster Damage

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Natural Disaster Damage
Shutterstock / By Droidworker | https://www.shutterstock.com/g/droidworker

Devastating natural disasters dominated last year’s headlines and made many wonder how the affected areas could ever recover. According to data from the U.S. National Oceanic and Atmospheric Administration (NOAA), the storms and other weather events that caused the destruction were extremely costly.

Specifically, the natural disasters recorded last year caused so much damage that the associated losses made 2017 the most expensive year on record in the 38-year history of keeping such data. The following are several reasons that 2017 made headlines for this notorious distinction.

Over a Dozen Events With Losses Totalling More Than $1 Billion Each

The NOAA reports that in total, the recorded losses equaled $306 billion, which is $90 billion more than the amount associated with 2005, the previous record holder. One of the primary reasons the dollar amount climbed so high last year is that 16 individual events cost more than $1 billion each.

Global Warming Contributed to Hurricane Harvey

Hurricane Harvey, one of two Category-4 hurricanes that made landfall in 2017, was a particularly expensive natural disaster. Nearly 800,000 people needed assistance after the storm. Hurricane Harvey alone cost $125 billion, with some estimates even higher than that. So far, the only hurricane more expensive than Harvey was Katrina.

Before Hurricane Harvey hit, scientists speculated climate change could make it worse. They discussed how rising ocean temperatures make hurricanes more intense, and warmer atmospheres have higher amounts of water vapor, causing larger rainfall totals.

Since then, a new study published in “Environmental Research Letters” confirmed climate change was indeed a factor that gave Hurricane Harvey more power. It found environmental conditions associated with global warming made the storm more severe and increase the likelihood of similar events.

That same study also compared today’s storms with ones from 1900. It found that compared to those earlier weather phenomena, Hurricane Harvey’s rainfall was 15 percent more intense and three times as likely to happen now versus in 1900.

Warming oceans are one of the contributing factors. Specifically, the ocean’s surface temperature associated with the region where Hurricane Harvey quickly transformed from a tropical storm into a Category 4 hurricane has become about 1 degree Fahrenheit warmer over the past few decades.

Michael Mann, a climatologist from Penn State University, believes that due to a relationship known as the Clausius-Clapeyron equation, there was about 3-5 percent more moisture in the air, which caused more rain. To complicate matters even more, global warming made sea levels rise by more than 6 inches in the Houston area over the past few decades. Mann also believes global warming caused the stationery summer weather patterns that made Hurricane Harvey stop moving and saturate the area with rain. Mann clarifies although global warming didn’t cause Hurricane Harvey as a whole, it exacerbated several factors of the storm.

Also, statistics collected by the Environmental Protection Agency (EPA) from 1901-2015 found the precipitation levels in the contiguous 48 states had gone up by 0.17 inches per decade. The EPA notes the increase is expected because rainfall totals tend to go up as the Earth’s surface temperatures rise and additional evaporation occurs.

The EPA’s measurements about surface temperature indicate for the same timespan mentioned above for precipitation, the temperatures have gotten 0.14 Fahrenheit hotter per decade. Also, although the global surface temperature went up by 0.15 Fahrenheit during the same period, the temperature rise has been faster in the United States compared to the rest of the world since the 1970s.

Severe Storms Cause a Loss of Productivity

Many people don’t immediately think of one important factor when discussing the aftermath of natural disasters: the adverse impact on productivity. Businesses and members of the workforce in Houston, Miami and other cities hit by Hurricanes Harvey and Irma suffered losses that may total between $150-200 billion when both damage and sacrificed productivity are accounted for, according to estimates from Moody’s Analytics.

Some workers who decide to leave their homes before storms arrive delay returning after the immediate danger has passed. As a result of their absences, a labor-force shortage may occur. News sources posted stories highlighting that the Houston area might not have enough construction workers to handle necessary rebuilding efforts after Hurricane Harvey.

It’s not hard to imagine the impact heavy storms could have on business operations. However, companies that offer goods to help people prepare for hurricanes and similar disasters often find the market wants what they provide. While watching the paths of current storms, people tend to recall storms that took place years ago and see them as reminders to get prepared for what could happen.

Longer and More Disastrous Wildfires Require More Resources to Fight

The wildfires that ripped through millions of acres in the western region of the United States this year also made substantial contributions to the 2017 disaster-related expenses. The U.S. Forest Service, which is within the U.S. Department of Agriculture, reported 2017 as its costliest year ever and saw total expenditures exceeding $2 billion.

The agency anticipates the costs will grow, especially when they take past data into account. In 1995, the U.S. Forest Service spent 16 percent of its annual budget for wildfire-fighting costs, but in 2015, the amount ballooned to 52 percent. The sheer number of wildfires last year didn’t help matters either. Between January 1 and November 24 last year, 54,858 fires broke out.

2017: Among the Three Hottest Years Recorded

People cause the majority of wildfires, but climate change acts as another notable contributor. In addition to affecting hurricane intensity, rising temperatures help fires spread and make them harder to extinguish.

Data collected by the National Interagency Fire Center and published by the EPA highlighted a correlation between the largest wildfires and the warmest years on record. The extent of damage caused by wildfires has gotten worse since the 1980s, but became particularly severe starting in 2000 during a period characterized by some of the warmest years the U.S. ever recorded.

Things haven’t changed for the better, either. In mid-December of 2017, the World Meteorological Organization released a statement announcing the year would likely end as one of the three warmest years ever recorded. A notable finding since the group looks at global land and ocean temperature, not just statistics associated with the United States.

Not all the most financially impactful weather events in 2017 were hurricanes and wildfires. Some of the other issues that cost over $1 billion included a hailstorm in Colorado, tornados in several regions of the U.S. and substantial flooding throughout Missouri and Arkansas.

Although numerous factors gave these natural disasters momentum, scientists know climate change was a defining force — a reality that should worry just about everyone.

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Environment

How to be More eco-Responsible in 2018

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eco-responsible
Shutterstock / By KENG MERRY Paper Art | https://www.shutterstock.com/g/kengmerrymikeymelody

Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.

Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:

1. Energy – produce it, save it

If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.

It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.

While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.

energy efficient

Shutterstock Licensed Photo – By My Life Graphic

Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!

2. Don’t be just another tourist

Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.

3. Let your beauty be also eco-friendly

eco-friendly

Shutterstock / By Khakimullin Aleksandr

We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t  mean that some of the product’s ingredients haven’t been tested on some poor animal.

To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.

It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.

4. Know thy recycling

People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.

People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.

5. Fashion can be both eco-friendly and cool

Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.

All in all

The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.

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