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Ethical, responsible, sustainable: what should we call enlightened investment?

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The sustainable investment industry has come a long way from its purely ethical roots. No longer is it simply about screening out the bad guys, as has already been shown this National Ethical Investment Week.

Accompanying this shift in purpose and impact is an evolution of name. What was once solely described as ethical investment is now referred to as sustainable, responsible, impact, green and a whole host of other variations.

Each has its own specific meaning, but collectively, the terms form part of the enlightened investment scale, of investment strategies that take into account environmental and social factors, as well as financial ones.

The Quakers – or the Religious Society of Friends – are often said to have devised the idea of investment that isn’t solely for profit. Around the time when slavery was legal in the UK, and investors were profiting from it, the Quakers decided to take a stand and opt to take their money away from the activity.

Theirs was almost exclusively a decision made for ethical or moral reasons, but who is to say that this enlightened group of 18th and 19th century individuals didn’t predict slavery’s eventual abolition and decide to divest from and exclude the practice on the same grounds as 21st century investors are divesting from and excluding fossil fuel stocks because of their impact on global warming?

While it now has several offshoot strategies, ethical investment itself still exists today. A wide range of businesses, charities and retail investment funds place negative screening at the centre of their portfolios, excluding sectors and companies that may be contradictory to their core aims (or not, in some cases). The classic example is a cancer charity excluding tobacco firms.

Well-meaning retail investors have perhaps been harshly treated by onlookers over the ethical investment funds they invest in, which while excluding animal testing and arms manufacturers, for example, may have large holdings in fossil fuel firms like Shell and BP.

These funds attract a certain amount of negative press, and prompts media outlets to ask silly questions like, “Can investments ever be ethical?” The answer, of course, is yes they can, but the key point is that ethics are very much personal.

Some funds however are very ethical, or dark green. They historically focus more on the environmental or social good (or rather, the lack of environmental or social bad) they do.

Speaking to Blue & Green Tomorrow, Mike Appleby, a sustainable and responsible investment (SRI) analyst at Alliance Trust Investments, said this type of ethical investor “has been slightly neglected over time because it’s not fashionable to talk about ethics and negative screening”.

He added, “At the ethical end of the spectrum, a lot of people are judging how good the fund is by how much of the benchmark gets excluded. And that’s fine. There are lots of people there, and that’s actually where the origins of the industry are.”

Towards the middle of the enlightened investment spectrum are funds that exclude certain areas, but also select stocks through an environmental, social or governance (ESG) lens. Then at the other end, also called light green, are those that have very loose screens and/or ESG criteria. The latter set of funds often prefer to use their investment clout and engage with some of the historically unethical or unsustainable industries, in order to effect positive, sustainable change from within.

Alliance Trust runs a range of Sustainable Future funds and is one of the industry leaders in sustainable investment. Appleby said, Too much time is devoted to trying to define, and then two years later redefine, what different flavours of sustainable investing are called.

I do think that it’s important that if a fund says it does include sustainability in the investment process, it has to be very clear and transparent about its criteria and how it is applied. We take this one step further and disclose all holdings in our Sustainable Future funds so investors know exactly where their money is invested.

It may be National Ethical Investment Week (NEIW), but a Blue & Green Tomorrow poll, which was conducted with a self-selecting sample of our readership and therefore may not be representative, suggests that ‘ethical’ is perhaps an outdated term.

Nearly half of respondents said ‘sustainable’ was the term that most accurately described an investment strategy that balances the needs of people, the planet and profit. ‘Ethical’ was joint second with ‘socially responsible’, recording just over 16% of votes.

There are questions about its name, but NEIW is a useful forum, as long as people understand that all types of sustainable funds, cleantech funds, ethical funds and so on will be under that banner”, said Peter Michaelis, head of SRI at Alliance Trust.

“If that’s the case, I don’t think the naming matters.”

Speaking at a NEIW event hosted by FT Adviser on ethical and sustainable investment, James Cameron of Climate Change Capital spoke of his experience with the naming of the industry.

I founded Climate Change Capital 10 years ago in order to channel capital into the highly complex, highly distributed problem of climate change, in ways that could resonate with mainstream investors and didn’t need a label of ethical investment or socially responsible investment but in fact was”, he said.

“We invented for ourselves the idea that we were creating wealth worth having.

It is possible to build an investment strategy that doesn’t have any of these labels, that does fit with the needs of institutional investors and indeed with governments who change their mind from time to time on whether they want to be green or not, and does over time – and that’s a key factor – deliver real and lasting benefits to society.”

National Ethical Investment Week 2013 runs from October 13-19. Join the debate on Twitter using the hashtag #moneydoinggood.

Further reading:

‘Positive’ investment worth £1.6bn in the UK

63% of UK investors want to be offered sustainable investment options

£11 billion invested ethically in the UK: infographic analysis

Survey: environmental issues concern ethical investors the most

The Guide to National Ethical Investment Week 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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