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NEST: ‘Nowhere for interest in ethical pensions funds to go but up’



Paul Todd, assistant director of investment at the National Employment Savings Trust (NEST), which was set up to facilitate automatic pension enrolment, looks at the growth, challenges and opportunities of the ethical pension market.

As consumers, making ethical choices is rarely a clear cut thing – if I want to buy or save into something badged ‘ethical’ how do I know its idea of what’s ‘ethical’ is consistent with my idea of ‘ethical’? How can I be confident I’m buying into something that matches my values?

These are legitimate, if difficult, questions. But this shouldn’t mean those looking for ethical choices should avoid looking altogether.

Similarly, we think that those responsible for designing products shouldn’t sidestep the challenges, but look to meet the growing demand and be prepared to answer probing questions.

The UK ethical consumer market was worth £54 billion in 2013, more than triple the size it was just over a decade ago. Consumer demand for ethical products has continued to grow, even during the recession.

This trend may not have yet translated into a significant take-up of ethical pension funds. But that doesn’t mean the demand isn’t there.

Low take-up is more likely a symptom of a wider issue – mainly the fairly commonplace misconception many people have about what happens to their money when it’s in a pension.

Many of those enrolled into a pension scheme by their employer don’t realise a pension is invested at all. If they did, the concept of investing is still quite far removed from their day-to-day interactions with shops and businesses.

The government reforms that automatically enrol people into pension schemes bring millions more people into pension saving. As their pots begin to build up, we expect there to be more interest in where that money is going.

So while this may be a slow burn, evidence from the consumer market suggests there is nowhere for interest in ethical pension funds to go but up.

We’ve spent a lot of time researching and learning about our future members. What we found is that members want the option of having a choice over what happens to their money. There is also a clear desire for many to be able to invest according to ethical or religious beliefs.

But research also tells us that too much choice is debilitating and disempowering, leaving savers simply overwhelmed and less likely to make any choices at all.

Offering NEST members access to ethical investments is therefore important, but forcing members to choose between numerous different ethical options is likely to be counter to what they need and want.

That’s why we offer a single ethical option which we’ve designed carefully to take account of the ethical concerns of what we know our members care about.

So what are those ethical considerations?

Interestingly, the research we’ve carried out indicates that people are not as concerned about traditional ethical no-go areas like alcohol or gambling. The main things people were concerned about were social in nature and often global in scope.

Labour rights in the UK, human rights abuses, child and forced labour, corrupt regimes and, to a lesser extent, environmental and ecological damage.

Excluding companies on the basis of bad practice in any of these areas is an obvious pre-requisite for our Ethical Fund. But equally important is positively reinforcing good behaviour through proactive investments and engagement.

Property, for example, is one area where shareholders can help drive greater environmental sustainability, improve communities and tackle social problems.

NEST’s Ethical Fund has around 20% allocated to UK property through the GRESB green star-rated Legal and General Investment Management (LGIM) Managed Property Fund, which has won a number of awards for its focus on integrating sustainability across their real estate investments.

As more and more people start saving for the first time under government pension reforms, we believe it is time for there to be greater unity of purpose in the world of ethical products. More and more consumers want ethical and sustainable goods and it’s likely that demand for ethical pension funds will follow.

The challenge for all providers in the ethical space is to develop products that are simple, effective and do not compromise on value. For our part, we don’t think there should be a trade-off between quality and performance and exercising your ethical preference.

Paul Todd is the assistant director of investment at NEST.

Photo: Simon Cunningham via Flickr

Further reading:

Prince Charles: pensions industry ‘has a duty’ to be sustainable

Norwegian pension fund divests from ‘financially worthless’ fossil fuel firms

Croydon Council announces move to ethical pension funds

Which? says impartial advice ‘critical’ to protecting pensioners

Norwegian pension fund rejects OECD ethical guidelines


How Going Green Can Save A Company Money



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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5 Easy Things You Can Do to Make Your Home More Sustainable




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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