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For a church, fiduciary responsibility should not trump social responsibility

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One of the defences in the Church of England’s clerical kerfuffle over its indirect seed funding of payday lender Wonga (APR 5,853%), was that investment managers have ‘fiduciary responsibility’. Since it’s someone else’s money, they must maximise financial returns. For those investing on behalf of a church, fiduciary responsibility cannot and should not trump moral or social responsibility.

Radio 4’s Today programme gave the archbishop of Canterbury Justin Welby an unusually fair hearing during the 8.10am slot on Friday. He was likeable, humble, apologetic and embarrassed. To be fair, the investment in question predates his tenure, so he can’t really be held responsible.

Having covered the Archbishop’s declaration that he would compete payday lenders out of business, we wanted to cover this turn of events in some depth.

Click here to read The Guide to Sustainable Investment 2013

On Friday we wrote about the story as it broke, interviewed the Ethical Investment Advisory Group of the Church of England and published a blog quoting the archbishop’s question, “Is a little sin tolerable?to which his clear answer was no.  He then went on to use the ‘it’s complicated’ defence.

Exodus 23:25 states, “If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.” So, that rules out investing in payday lenders. Saying the world “is complicated” is simply not a good enough response for a religious leader. It all seems a little pick-and-mix if you can so easily ignore the central text of your faith.

While the usual suspects of anti-sustainable and anti-ethical investment will use this relatively trivial event to knock the ethical sector, the whole debate has missed one point and highlighted another. It misses the point that the sector has evolved significantly from negative screening and its ethical past to positive selection and a sustainable future. It highlights a wider and more critical issue: transparency. Do any of us really know what we are investing in?

These two issues can be turned to the sustainable and ethical sector’s advantage.

Firstly, there is a great story to be told about the future of sustainable investment. This would be about clean energy and energy security, resource efficiency, reforestation, education, health, improved infrastructure and transport, leapfrog innovation, new green collar jobs and a valuable export opportunity for the most innovative and inventive of nations – the United Kingdom. The BBC asked, “Can investments ever be ethical?”, but this is the endlessly asked wrong question. We should be asking, “Why aren’t all investments sustainable?

Secondly, very few people know what they’re investing in across their portfolio. This news story will probably make more people look a little closer. It is down to the sustainable and ethical investment sector to tell them and help them find the information.

The FTSE All-Share and All-World Indices are heavily dominated by financial institutions and oil and gas producers.

These are the organisations that have done, and are still doing, the greatest damage to the global economy and environment respectively. If you invest in anything other than the most selective of funds, you will be investing in these economy and environment-wreckers. This is degrading the world for your children, for the possibility, and it’s only a possibility, of a marginally higher profit today.

In the past, we have called for transparency, simplicity and honesty in investment, including real-time publishing of all fund holdings online. If this were the case, investors could make informed choices on what they wished to invest in, and a future archbishop might not be so embarrassed.

The sin stocks – tobacco, gambling, alcohol, pornography, arms and nuclear – represent a relatively small share of the equity markets. They still matter because they are riddled with dubious practices and create widespread human misery. However, focusing exclusively on them is a distraction to the existential threats of global economic instability, pollution, resource scarcity and climate change.

The Church of England: living like drunken sailors

As Aldous Huxley exquisitely put it in his collected essays of 1959, Tomorrow and Tomorrow and Tomorrow, “We may not appreciate the fact; but a fact nevertheless it remains: we are living in a Golden Age, the most gilded Golden Age of human history—not only of past history, but of future history.  For, as Sir Charles Darwin and many others before him have pointed out, we are living like drunken sailors, like the irresponsible heirs of a millionaire uncle.

At an ever-accelerating rate, we are now squandering the capital of metallic ores and fossil fuels accumulated in the Earth’s crust during hundreds of millions of years. How long can this spending spree go on? Estimates vary. But all are agreed that within a few centuries or at most a few millennia, man will have run through his capital and will be compelled to live, for the remaining nine thousand nine hundred and seventy or eighty centuries of his career as Homo sapiens, strictly on income.

Sir Charles is of the opinion that man will successfully make the transition from rich ores to poor ores and even seawater, from coal, oil, uranium and thorium to solar energy and alcohol derived from plants. About as much energy as is now available can be derived from the new sources—but with a far greater expense in man hours, a much larger capital investment in machinery. And the same holds true of the raw materials on which industrial civilization depends. By doing a great deal more work than they are doing now, men will contrive to extract the diluted dregs of the planet’s metallic wealth or will fabricate non-metallic substitutes for the elements they have completely used up.

In such an event, some human beings will still live fairly well, but not in the style to which we, the squanderers of planetary capital, are accustomed.”

Is extracting diluted dregs and squandering planetary capital what Jesus would have wanted?

In a 2011 blog entitled Jesus the Investment Banker, one commenter wrote, “I think Jesus would invest in companies that were successful too, but he probably measures success differently than we do. I don’t think he would invest in oil companies that destroy the environment and run indigenous peoples off their lands.

I don’t think he would support coal companies that practice mountain top removal even though it is cost effective. He took his time making those mountains. I don’t think he wants them levelled. Even though weapons manufacturing companies are some of the most powerful and successful corporations on Earth, I don’t think he would invest there either but he might help them retrofit their factories to make plough shears and pruning hooks.

Since Jesus loves people, he probably doesn’t want them to be destroyed for lack of knowledge so he would probably invest in education. Since he is going to heal all sickness and diseases, he would probably invest in healthcare. Since God told Noah to take two of every kind of animal into the ark so that they wouldn’t be wiped out by the flood he probably doesn’t want our business practices to cause those same animals to go extinct.

He would probably have regulations (lots of them) to make sure the business is being done safely and clean and fairly.

Then again, He might just have one requirement to guide his investment. 1) One should treat others as one would like others to treat oneself, or 2) One should not treat others in ways that one would not like to be treated.”

Exactly, and quite brilliantly put.

We recognise that the church needs to make a return on its investment to pay pensions, maintain its many buildings and support its mission and message. That return should be made responsibly, not 75%, 90% or 97% responsibly.

If a church that claims moral authority, cannot be courageous, assume ethical leadership and be socially responsible with its investments, is has lost its right to be critical of anyone else who chooses not to. Worse still, it has aided the argument not to do so.

Further reading:

Is a little sin tolerable? Ethical investment and searching for the good

Wonga, the archbishop and the Ethical Investment Advisory Group: interview

Archbishop ‘embarrassed’ at Church of England investment in Wonga backer

‘We will compete you out of existence’, Archbishop tells payday lenders

The Guide to Sustainable Investment 2013

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

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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