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Gaeia, Barchester Green and financial advice on ‘sensible investment’

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Having been at the forefront of ethical and sustainable financial advice for two decades, Gaeia and Barchester Green revealed on Monday that they would be joining forces. Alex Blackburne hears from key decision-makers to uncover the thinking behind the deal.

John Eckersley knows the shortcomings of the financial advice industry all too well. The CEO of Manchester-based investment manager Castlefield has heard too many stories from clients that follow the same theme: “We get people coming to us saying they’ve been trying to talk about sustainable investment with their normal IFA, who said it’s not worth it.”

It is perhaps for this reason that Eckersley has moved to acquire Barchester Green, one of the UK’s foremost ethical investment specialist financial advisory firms. The deal was announced on Monday and follows Castlefield’s 2011 acquisition of another leading ethical investment specialist, Gaeia.

Speaking to Blue & Green Tomorrow about the thinking behind the takeover, Eckersley says, “[Sustainable investment] needs to be mainstream. There needs to be nothing unusual about having a conversation about investing sustainably. We’ve got to get away from this business where people go to a mainstream [independent financial adviser (IFA)] and say they want to invest ethically, only to be told, ‘You don’t want to be bothered with that. It tends to underperform’.”

Before buying Gaeia, Castlefield had built its business around investment management for not-for-profit organisations, so had already dipped its toe in the ethical investment waters. While looking to for ways to expand, Eckersley had a conversation with Gaeia founder Brigid Benson – who at the time was looking for a long-term solution for the firm.

They were all about ethical advice and we were already doing ethical investment – so the idea was that hopefully in time, their client base might see us as a natural solution for managing their money, rather than using a third party manager”, Eckersley explains.

What struck me as Gaeia became part of the family is that there’s an IFA sector out there which is committed to ethical, ecological and environmental investing. There are individuals who work for traditional IFA practices who are committed to it but probably don’t get a lot of support doing it. And then there are a small number of organisations who actually do specialise in it.”

The sector Eckersley talks about may be small – the membership body the Ethical Investment Association (EIA) has less than 50 individual and organisational members – but it is growing steadily. Eiris, the responsible investment research firm, says over £12.2 billion is invested in green and ethical retail funds in the UK – up from £3.5 billion a decade ago.

While this figure still only represents 1-2% of the overall funds under management, its growth suggests more investors are beginning to seek out ethical and sustainable options. The coming together of Gaeia and Barchester Green – two founding EIA members – represents a big step forward for the market more generally.

It’s quite important for retail ethical and sustainable investing, because it creates what I think is the first big sustainable IFA. A lot of the IFAs out there are just far too small”, says John Ditchfield, Barchester Green director and co-chair of the EIA.

At the moment, you’ve got a huge gap between the potential demand for this service and the scale of the market. But there’s a case to say this is the first time we’ve seen a large ethical and sustainable investment business in the UK, more or less full stop.

I want to see the UK develop a really strong retail market for ethical and environmental investing, so the opportunity to work with the likes of John Eckersley at Castlefield and the Gaeia team in achieving that is a good opportunity to build a national brand that can really promote ethical and sustainable investment.”

Castlefield’s acquisition of Barchester Green has been welcomed, with George Latham, chief investment officer at leading asset manager WHEB, saying, “Barchester Green and Castlefield Gaeia are both leading names in the sustainable and responsible investment industry. By joining together, I’m sure they will strengthen and broaden their reach, which will be a positive for the whole sector. We wish them every success.”

The employee-owned Castlefield estimates that its acquisition of Barchester boosts its funds under management by 75% – to over £350m. Meanwhile, with Castlefield and Gaeia based in the north-west of England and Barchester Green operating primarily in the south, the deal also makes geographical sense.

What is created is arguably the UK’s largest and oldest specialist ethical IFA firm, offering investors the opportunity to align their personal values with their finances. However for Eckersley, looking at sustainability issues stretches way beyond ethics or morals – it is simply good risk management.

It’s all part of the things you need to consider when you’re advising people on investment. If you want to look at it in strictly cynical terms, it’s basically saying you need to be aware of all the risks in the investments you’re thinking of making”, he says.

If you asked people whether they would want to avoid investing in a company that could implode overnight, whether or not they think of themselves as ethical investors, they probably would want to avoid it. It’s not about treehugging; it’s sensible investment – with the added benefit that it’s actually better for the environment and society.”

Photo: acerin via freeimages

Further reading:

Vital for wealth managers to understand investors’ values and motives

Sustainable financial advice: IFA Helen Tandy on values-based investment

John Ditchfield: ethical investment wins on price, performance and the planet

From ethics to sustainability: shifting the investment debate for 2014

The Guide to Ethical & Sustainable Financial Advice 2013

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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