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Getting engaged on Valentine’s Day

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Clare Brook, founding partner at WHEB Listed Equities, reflects on a recent shareholder engagement conference in France.

Friday February 14 was a propitious day to hold a conference about engagement in Paris. Although this conference focused on company engagement, as in how shareholders can use their influence as owners of companies to encourage management to be more responsible and responsive, rather than the more romantic type of engagement which one usually associates with Valentine’s Day.

The idea for the conference came about last June when Bertrand Fournier, president of the Forum d’Investissement Responsable (FIR, the French version of UKSIF) threw down the gauntlet to the responsible investment community in the UK saying that we were, in his view, leading the way in engagement practices, and that we should come and explain to French investors how we had got there and what they needed to do to catch up.

We at WHEB were happy to accept that challenge. In collaboration with Gregoire Cousté, executive director of FIR, and Xavier Desmadryl, global head of environmental, social and governance (ESG) research at HSBC, my colleague Seb Beloe and I devised a formula for the conference, which came to be nicknamed ‘l’entente cordiale’. And so it came into being, held at HSBC’s offices on the Champs Elysées on a rather cold and drizzly Valentine’s Day morning.

Any passing diplomat would have been gratified to witness equal numbers of French and English speakers on the podium: Marine de Bazelaire, HSBC France’s director of sustainable development, gave a welcoming address in French, followed by Simon Howard, chief executive of UKSIF, and Pierre-Henri Leroy, CEO of Proxinvest, giving introductory talks in English and French respectively. The panel, consisting of Seb Beloe from WHEB, Yo Takatsuki from F&C, Natacha Dimitrijevic from Hermes and Philippe Desfossés from ERAFP, was divided equally between anglo and francophones, while Hugh Wheelan, who was chairing the conference, gave a tour de force, alternating between French and English with great panache.

As the discussions unfolded, the entente was indeed very much cordiale, with far more agreement than discord from both sides of the Channel.

All the speakers addressed the importance of engagement: why it is necessary, and how it improves company performance and thus returns. Simon Howard alluded to “plenty of evidence” showing that the financial performance of companies is improved if their ESG is better, and that it makes sense for investors interested in maximising returns to ensure that management is doing as much as possible to promote ESG performance. Pierre-Henri Leroy pointed out that shareholders are the true owners of companies, and that they should make their voices heard; Philippe Defossés argued persuasively that successful engagement can reduce volatility and anticipate risk, using BP’s Deepwater Horizon disaster as a potent example.

Engagement was also cited as a way of combating the trend of short-termism, which Natacha Dimitrijevic described as “a problem everywhere”. Yo Takatsuki commented that the reaction of politicians and the media to events such as Deepwater Horizon, Fukushima or the financial crisis tends to be short-term and extreme; and while they then move on to the next crisis or news story, investors are able to take a longer term view and work with a company or series of companies to resolve the issue and improve things for the future. Seb Beloe described engagement a key part of  the investment process, and that through engaging with company management one can get a much better sense of the true quality of that management. Meanwhile, Philippe Desfossés said that long-term investors who engage with companies better serve the interests of all shareholders.

A point of debate came around the issue of whether engagement achieves more if it is carried out behind closed doors or in public. Howard argued that the general public is not being made aware that engagement is happening on its behalf, and that if progress is to be made, then those carrying out engagement should trumpet it; they should let regulators and the government know that this is going on so that more can be done to encourage it. But Desfossés countered that making engagement public would be a “recipe for disaster”, that successful engagement is a dialogue, not a confrontation. Others suggested that perhaps there are two stages to engagement: the stage that takes place behind closed doors in a spirit of collaboration or constructive criticism, but then, if the management remains wilfully unresponsive, a second stage of public engagement could be brought in as a powerful weapon to force change through.

In conclusion, the consensus was that engagement has come a long way, whether in the UK, France or elsewhere in the world generally. There is more being achieved in terms of supportive legislation, such as the Stewardship Code, and in collaboration between investors over issues such as unburnable carbon. But engagement is still carried out patchily and there is much more that can be achieved. With some of the best practitioners in Europe represented at the conference, the hope is that these discussions will not only spur them on to take a bolder stance, but encourage others to follow in their footsteps. As to the entente cordiale between the French and the English, this really does seem to be “the start of a beautiful friendship”.

Clare Brook is founding partner at WHEB Listed Equities.

Further reading:

Why share ownership is better than share rental

Financial Times advises on how to become a shareholder activist

Shareholder engagement: the church should be ‘involved in the field of play’ when investing

Sustainable investment needs to be ‘core to how we live our lives’

Shareholder revolts on the up as more investors begin to use ownership rights

Articles, features and comment from WHEB Group, an independent investment management firm specialising in opportunities created by the global transition to more sustainable, resource efficient economies. Posts are either original or previously featured on WHEB’s blog or in its magazine, WHEB Quarterly.

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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