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Responsible investment is ‘an inevitable movement in society’

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The Principles for Responsible Investment (PRI) is a United Nations-backed initiative that seeks to engage investors on environmental, social and governance (ESG) issues. Its executive director, James Gifford, speaks with Blue & Green Tomorrow.

This piece originally featured in Blue & Green Tomorrow’s Guide to Sustainable Investment 2013.

What are the main changes you’ve witnessed within the responsible investment industry in the past year?

There’s been significantly more interest in responsible investment in hedge funds. And I guess the overarching thing is a continued broadening of responsible investment into other asset classes. That’s the top level trend which has been very strong over the last year. The other area worth commenting on is ESG integration, or factoring ESG issues into mainstream, fundamental analysis – bottom-up stock picking.

Click here to read The Guide to Sustainable Investment 2013

I think what we’re seeing is two forces, which are changing that in a very positive way. The first one is that there’s just a lot more ESG research that is just higher quality, and more fund managers are starting to use it.

There’s now a recognition that these issues are more material than ever; it’s not just that they’re important – they’ve always been important for companies – it’s that there’s a recognition that the world is changing faster than it has ever changed before. So the rate of change is increasing.

Many of the most important changes are loosely within the ESG bucket, so change is opportunity. When you’re talking about investment, change equals opportunity, because when things are changing, some people will be faster and some people will be slower to understand and in effect trade on those changes. And ESG issues, being some of the largest, most important megatrends happening in society, simply translate into opportunities for the cutting-edge of investors to outperform their peers.

The other big strand supporting ESG integration is the academic research. The proliferation of really interesting academic research around demonstrating that these issues are material is very persuasive, and we simply didn’t have this level of persuasiveness in academic research 10 years ago.

What are the main drivers for this growth in responsible investment?

I think there are three drivers. There’s a reputational driver, which we’ve seen with some of the weapons manufacturers being divested at the moment in the US. And there are financial elements to that, certainly, as well.

Then there’s the investment belief. These are no longer niche, irrelevant issues. They are actually issues that are discussed by boards of companies, at the very highest levels. And yet, many investors are still waking up to this fact; that management of ESG issues, sustainability issues and anti-corruption programmes – these are core to the corporations they own, so why would they not be core to the owners of those corporations?

The third driver, which is a big one, is client pressure from the asset owners, in particular pension funds, on their fund managers. The easy way to put it is society is heading in that direction anyway. Corporations, regulators and consumers are caring more about these issues, so investors can’t pretend these issues aren’t relevant. They are part of that ecosystem, and as that ecosystem takes these issues into account in much more systematic and deep ways, so too will investors inevitably.

Do you think the PRI’s work has led to significant behavioural change within corporations?

There are obviously a lot of drivers and it’s impossible to pin it down to the PRI alone – a certain proportion would have happened anyway, because this is one of those inevitable movements in an industry – but I think we have been able to make that faster, because we’ve engaged with hundreds and hundreds of signatories, or investors in institutions, who were never engaged with responsible investment before.

We have signed up hundreds and hundreds of investors who are very much mainstream investors, and many of them have really moved ahead in responsible investment. There may have been another catalyst, but what we can say is that we certainly are a catalyst for many hundreds of signatories.

Next year, we’re moving to a mandatory transparency framework for reporting to the public, which means that over 1,000 signatories will be reporting significant amounts of responsible investment information to the public for the first time. That’s really quite dramatic, and they’ll be delisted from the PRI if they don’t want to participate in that process. So the PRI is really driving transparency within this industry in a way that wouldn’t have happened without us.

In terms of the underlying corporations, we certainly have some good evidence that our work has resulted in improvements in corporate activity, but the easy ones to determine are things like disclosure – are the corporations disclosing more than they were before investors asked them to disclose?

But what’s more important than focusing on those very difficult-to-answer questions is are the investors changing their behaviour and are they doing the type of things that we would expect, over time, to result in improvements in corporate behaviour? And to that, I think we can answer a very clear yes.

What are the main trends going forward and what will be the PRI’s main focuses?

Responsible investment, active ownership and ESG integration don’t really help if the system is collapsing. So reflecting on the financial crisis, we are now looking at how investors can collectively work to try to address some of the more systemic problems. So rather than focusing on the investor-company interaction, what’s not working in the system overall?

How do we go about making ethical, sustainable and responsible investment mainstream?

I think there are dozens of examples that show how unethical behaviour can lead to dramatic financial losses; you can look at the fines being imposed on a number of banks right now for Libor or money laundering; you can look at News Corporation and ethical issues around phone hacking.

Combining those, academic evidence that being a good company can result in outperformance, plus obvious examples of where poor corporate responsibility leads to scandals and high risk behaviour, we just continue to make that case.

This is an inevitable movement in society; it’s not just an investment movement, it’s a corporate and societal movement. With each new generation, there is more recognition that these issues are important and responsible investment is simply the investor part of an inevitable movement, which is basically created by having thousands of these conversations to demonstrate why it’s important. We need to demonstrate the business case.

Further reading:

Encouraging sustainable finance: the Principles for Responsible Investment

The principles for responsible investment: a round-up

PRI signatories pick out top ESG engagement issues

The Guide to Sustainable Investment 2013

Features

Ways Green Preppers Are Trying to Protect their Privacy

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Environmental activists are not given the admiration that they deserve. A recent poll by Gallup found that a whopping 32% of Americans still doubt the existence of global warming. The government’s attitude is even worse.

Many global warming activists and green preppers have raised the alarm bell on climate change over the past few years. Government officials have taken notice and begun tracking their activity online. Even former National Guard officers have admitted that green preppers and climate activists are being targeted for terrorist watchlists.

Of course, the extent of their surveillance depends on the context of activism. People that make benign claims about climate change are unlikely to end up on a watchlist, although it is possible if they make allusions to their disdain of the government. However, even the most pacifistic and well intentioned environmental activists may unwittingly trigger some algorithm and be on the wrong side of a criminal investigation.

How could something like this happen? Here are some possibilities:

  • They could share a post on social media from a climate extremist group or another individual on the climate watchlist.
  • They could overly politicize their social media content, such as being highly critical of the president.
  • They could use figures of speech that may be misinterpreted as threats.
  • They might praise the goals of a climate change extremist organization that as previously resorted to violence, even if they don’t condone the actual means.

Preppers and environmental activists must do everything in their power to protect their privacy. Failing to do so could cost them their reputation, future career opportunities or even their freedom. Here are some ways that they are contacting themselves.

Living Off the Grid and Only Venturing to Civilization for Online Use

The more digital footprints you leave behind, the greater attention you draw. People that hold controversial views on environmentalism or doomsday prepping must minimize their digital paper trail.

Living off the grid is probably the best way to protect your privacy. You can make occasional trips to town to use the Wi-Fi and stock up on supplies.

Know the Surveillance Policies of Public Wi-Fi Providers

Using Wi-Fi away from your home can be a good way to protect your privacy.However, choosing the right public Wi-Fi providers is going to be very important.

Keep in mind that some corporate coffee shops such a Starbucks can store tapes for up to 60 days. Mom and pop businesses don’t have the technology nor the interest to store them that long. They generally store tips for only 24 hours and delete them afterwards. This gives you a good window of opportunity to post your thoughts on climate change without being detected.

Always use a VPN with a No Logging Policy

Using a VPN is one of the best ways to protect your online privacy. However, some of these providers do a much better job than others. What is a VPN and what should you look for when choosing one? Here are some things to look for when making a selection:

  • Make sure they are based in a country that has strict laws on protecting user privacy. VPNs that are based out of Switzerland, Panama for the British Virgin Islands are always good bets.
  • Look for VPN that has a strict no logging policy. Some VPNs will actually track the websites that you visit, which almost entirely defeats the purpose. Most obviously much better than this, but many also track Your connections and logging data. You want to use a VPN that doesn’t keep any logs at all.
  • Try to choose a VPN that has an Internet kill switch. This means that all content will stop serving if your VPN connection drops, which prevents your personal data from leaking out of the VPN tunnel.

You will be much safer if you use a high-quality VPN consistently, especially if you have controversial views on climate related issues or doomsday prepping.

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Features

How Going Green Can Save Your Business Thousands

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Running a company isn’t easy. From reporting wages in an efficient way to meeting deadlines and targets, there’s always something to think about – with green business ideas giving entrepreneurs something extra to ponder. While environmental issues may not be at the forefront of your mind right now, it could save your business thousands, so let’s delve deeper into this issue.

Small waste adds up over time

A computer left on overnight might not seem like the end of the world, right? Sure, it’s a rather minor issue compared to losing a client or being refused a loan – but small waste adds up over time. Conserving energy is an effective money saver, so to hold onto that hard-earned cash, try to:

  • Turn all electrical gadgets off at the socket rather than leaving them on standby as the latter can crank up your energy bill without you even realizing.
  • Switch all lights off when you exit a room and try switching to halogen incandescent light bulbs, compact fluorescent lamps or light emitting diodes as these can use up to 80 per cent less energy than traditional incandescent and are therefore more efficient.
  • Replace outdated appliances with their greener counterparts. Energy Star appliances have labels which help you to understand their energy requirements over time.
  • Draught-proof your premises as sealing up leaks could slash your energy bills by 30 per cent.

Going electronic has significant benefits

If you don’t want to be buried under a mountain of paperwork, why not opt for digital documents instead of printing everything out? Not only will this save a lot of money on paper and ink but it will also conserve energy and help protect the planet. You may even be entitled to one of the many tax breaks and grants issued to organizations committed to achieving their environmental goals. This is particularly good news for start-ups with limited funds as the Environment Protection Agency (EPA) is keen to support companies opening up their company in a green manner.

Of course, if you’re used to handing out brochures and leaflets at every company meeting or printing out newsletters whenever you get the chance, going electronic may be a challenge – but here are some things you can try:

  • Using PowerPoint presentations not printouts
  • Communicating via instant messenger apps or email
  • Using financial software to manage your books
  • Downloading accounting software to keep track of figures
  • Arranging digital feedback and review forms
  • Making the most of Google Docs

Going green can help you to make money too

Going green and environmental stability is big news at the moment with many companies doing their bit for the environment. While implementing eco-friendly strategies will certainly save you money, reducing your carbon footprint could also make you a few bucks too. How? Well, consumers care about what brands are doing more than ever before, with many deliberately siding with those who are implementing green policies. Essentially, doing your bit for the environment is a PR dream as it allows you to talk about what everyone wants to hear.

Going green can certainly save your money but it should also improve your reputation too and give you a platform to promote your business.

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