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Economy

Green ISAs: it’s not too late to resurrect an inspired idea

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It’s been six years since the then-shadow chancellor George Osborne proposed the idea of green ISAs to encourage public engagement with, and inject capital into, the green economy.

At the time Osborne said, “Green ISAs will engage the public in a new way in the issues around climate change and show them very clearly the economic benefits of green investment.”

He was right. They very likely would have, while raising significant funds for investment in sustainable enterprise. Except in 2011 the once key Tory policy was dropped, never to make it into the chancellor’s budget box.

Fast forward to March this year, and the House of Commons environmental audit committee highlighted a significant green investment gap in its report on green finance. The report stated, “The current level of green investment is running at less than half of the level needed to deliver the decarbonisation implicit in national and international targets. A significant scale-up is needed.”

The gap is estimated to be between £10-12 billon a year, a ‘green deficit’ which grows every year insufficient investment is made into low-carbon generating assets and infrastructure. Green ISAs, if resurrected, could help fill that hole.

More than £57 billion was invested in ISAs in the last tax year alone, by 14.6 million subscribers. It’s not inconceivable that with the right incentives, in excess of £12 billion could be redirected into the green economy, each and every year.

Osborne’s original proposal was to extend the ISA allowance, which is currently £11,520, by £1,000–3,000 if invested in green ISAs. But it could be that an even lower increase could still boost investment in the green economy, with a few provisos.

To maximise the money injected into the sustainable economy, while minimising the cost of the tax relief to the exchequer, all money invested in a green ISA should be ring-fenced to green projects, not just the uplift.

The latest figures, from 2010/11, showed that 31% of cash ISA and 36% of stocks and shares ISA subscribers saved or invested the maximum amount possible. It is not at all unreasonable to assume that should the limit be raised even a relatively small amount, many of these would opt for putting the higher amount in a green ISA rather than less in its conventional equivalent.

All banks and building societies would have to be able to offer green ISAs, as long as they’re then able to use the funds to productively contribute to the green economy.

For a while, green ISAs were proposed as a way of funding the Green Investment Bank, which would put all the money raised with a single institution and create a bottleneck in terms of their capacity to distribute the funds. By enabling all banks to offer green ISAs, they become a mass market product with mass appeal. And banks would start to find that a significant, and growing, proportion of the money in their ISAs is ring-fenced to the green economy.

Finally, banks would have to be bound to using the money raised through green ISAs to finance new sustainable assets and infrastructure. Otherwise we’re likely to see banks going through their portfolios and retrospectively finding projects that fit the criteria, rather than getting the new money out and supporting the transition to a low-carbon economy.

The reality is that when green and tax do get a mention together in the budget on Wednesday, it will be in the context of the easing back of environmental taxes (whatever you choose to call them), sacrificed for the sake of growth and a more ‘resilient economy’.

The real shame is that green ISAs could help to provide both of these with little or no cost to the exchequer. And throw in a populist tax break for good measure.

Will Ferguson is head of communications at Triodos Bank.

Further reading:

Green businesses call for sustainable ISA incentives

2014 could be ‘perfect time’ to invest in an ISA

Treasury looks to extend ISA reach to peer-to-peer finance and crowdfunding

Consider sustainability and ethics when investing in ISAs this year

First UK Islamic ISA gives consumers ethical tax-free way to save

Economy

Report: Green, Ethical and Socially Responsible Finance

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“The level of influence that ethical considerations have over consumer selection of financial services products and services is minimal, however, this is beginning to change. Younger consumers are more willing to pay extra for products provided by socially responsible companies.” Jessica Morley, Mintel’s Financial Services Analyst.

Consumer awareness of the impact consumerism has on society and the planet is increasing. In addition, the link between doing good and feeling good has never been clearer. Just 19% of people claim to not participate in any socially responsible activities.

As a result, the level of attention that people pay to the green and ethical claims made by products and providers is also increasing, meaning that such considerations play a greater role in the purchasing decision making process.

However, this is less true in the context of financial services, where people are much more concerned about the performance of a product rather than green and ethical factors. This is not to say, however, that they are not interested in the behaviour of financial service providers or in gaining more information about how firms behave responsibly.

This report focuses on why these consumer attitudes towards financial services providers exist and how they are changing. This includes examination of the wider economy and the current structure of the financial services sector.

Mintel’s exclusive consumer research looks at consumer participation in socially responsible activities, trust in the behaviour of financial services companies and attitudes towards green, ethical and socially responsible financial services products and providers. The report also considers consumer attitudes towards the social responsibilities of financial services firms and the green, ethical and socially responsible nature of new entrants.

There are some elements missing from this report, such as conducting socially responsible finance with OTC trading. We will cover these other topics in more detail in the future. You can research about Ameritrade if you want to know more ..

By this report today: call: 0203 416 4502 | email: iainooson[at]mintel.com

Report contents:

OVERVIEW
What you need to know
Report definition
EXECUTIVE SUMMARY
The market
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
The consumer
For financial products, performance is more important than principle
Competition from technology companies
Financial services firms perceived to be some of the least socially responsible
Repaying the social debt
Consumer trust is built on evidence
What we think
ISSUES AND INSIGHTS
Creating a more inclusive economy
The facts
The implications
Payments innovation helps fundraising go digital
The facts
The implications
The social debt of the financial crisis
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
PUTTING FINANCIAL SERVICES IN AN ETHICAL CONTEXT
An ethical economy
An ethical financial sector
Ethical financial services providers
GREEN, ETHICAL AND SOCIALLY RESPONSIBLE ISSUES IN FINANCIAL SERVICES
The role of investing
Divestment
The change potential of pensions
The role of trust
Greater transparency informs decisions
Learning from past mistakes
The role of innovation
Payments innovation: Improving financial inclusion
Competition from new entrants
The power of new money
The role of the consumer
Consumers empowered to make a change
Aligning products with self
THE CONSUMER – WHAT YOU NEED TO KNOW
For financial products, performance is more important than ethics
Financial services firms perceived to be some of the least socially responsible
Competition from technology companies
Repaying the social debt
Consumer trust is built on evidence
Overall trust levels are high
THE ETHICAL CONSUMER – SOCIALLY RESPONSIBLE ACTIVITIES
Payments innovation can boost charitable donations
Consumer engagement in socially responsible activities is high
Healthier finances make it easier to go green
SOCIALLY RESPONSIBLE COMPANIES
37% unable to identify socially responsible companies
Building societies seen to be more responsible than banks….
….whilst short-term loan companies are at the bottom of the pile
CONSUMER TRUST IN THE BEHAVIOUR OF FINANCIAL SERVICES COMPANIES
Overall trust levels are high
Tax avoidance remains a major concern
The divestment movement
Nationwide significantly more trusted
Trust levels remain high
CONSUMER ATTITUDES TOWARDS GREEN AND ETHICAL FINANCIAL PRODUCTS
For financial products, performance is more important than principle
Socially conscious consumers are more concerned
CONSUMER ATTITUDES TOWARDS TRANSPARENCY
Strategy reports provide little insight for consumers
Lack of clarity regarding corporate culture causes concern
Consumers want more information
THE ROLE OF FINANCIAL SERVICES FIRMS IN SOCIETY
The social debt of the financial crisis
THE SOCIAL RESPONSIBILITIES OF FINANCIAL SERVICES FIRMS
For consumers, financial services firms play larger economic role
Promoting financial responsibility
CHALLENGER COMPANIES AND SOCIAL RESPONSIBILITY
Consumer trust is built on evidence
The alternative opportunity
The target customer

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Economy

A Good Look At How Homes Will Become More Energy Efficient Soon

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energy efficient homes

Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.

There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.

1. The Rise Of Smart Windows

When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.

If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.

2. A Better Way To Cool Roofs

If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.

Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.

3. Low-E Windows Taking Over

It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.

They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.

4. Magnets Will Cool Fridges

Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.

The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.

5. Improving Our Current LEDs

Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.

That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.

Maybe Homes Will Look Different Too

Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.

ShutterStock – Stock photo ID: 613912244

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