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Responsible investors need to let the light in

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It is almost five years since the collapse of Lehman Brothers, but only now are we seeing the first stirrings of something that was almost universally called for at the time: investor transparency. 

In 2008, as the scale of the global financial crisis became clear, transparency was the one thing that all players seemed to agree was ‘a must’ when it came to fixing the system. Politicians, such as then-prime minister Gordon Brown said, “We must reform the international financial system around the agreed principles of transparency, integrity, responsibility”. Meanwhile investors, such as the board of the UN-backed Principles for Responsible Investment (PRI) – containing some of the world’s largest pension funds – issued a call for institutional investors to “publicly disclose their responsible investment activities […] to build more sustainable financial markets”.

Half a decade later, there are finally some signs that the managers of our pension funds, ISAs and other savings are responding to these calls and preparing to shed light on whether our money is being invested in a responsible way.

Last month, the first ever global awards for responsible investment reporting were handed out, as reported by Blue & Green Tomorrow, and later this year the PRI will make it compulsory for its 1,000+ investor signatories to publicly report their responsible investment activities. With over 130 UK funds and managers signed up to that initiative, the move will create a lot more transparency for the responsible investment market here in Britain.

In the UK, the need for transparency is also being driven by the introduction of auto-enrolment, which will see 6 to 9 million employees join the pensions system, and has led to calls from the Labour party and others for the pensions market to become more transparent and less complex in order to accommodate them.

This is good news. Transparency is certainly no cure-all for the problems of global financial markets, but it is a vital foundation. If financial markets are to win back the trust of the general public then they cannot just be responsible; they must be seen to be responsible.

For those investors that see themselves as responsible stewards (or ‘active owners’ to give it the alternative jargon), it’s also a case of practicing what they preach. Just as they demand that the companies they invest in disclose information about environmental, social and governance (ESG) issues, so they too should be open with their beneficiaries, clients and/or regulators about how they are taking these issues into consideration in their investments. 

Learning from the corporate sector

Investors should take inspiration from the growth of ESG disclosure within the corporate world. There are lessons to be learnt that can help investors to improve their transparency.

The most obvious example is the annual corporate responsibility (or sustainability) report. This was practically unheard of until the early 1990s, but now most major companies, from Coca-Cola to Carphone Warehouse, will produce an annual report (either digitally or in print) on how they are managing the ESG issues that affect them.

Investors should do likewise on responsible investment. Last month’s Responsible Investment Reporting Awards highlighted those funds that are ahead of the curve on this around the world – with the UK’s Environment Agency Pension Fund taking one of the two awards given out.

Another potential lesson to learn was highlighted last month by Catherine Howarth, chief executive of campaign group ShareAction. At an event I attended, she called for pension funds to consider holding AGMs each year – that is organising a mandatory yearly gathering, just as companies do, that gives the ‘rank and file’ a chance to hear from the executives and to have their say.

These are the sort of ideas that investors need to consider and act upon if they want to get serious about introducing a culture of openness, rather than opacity, in financial markets.

There is certainly still a long way to go. A ShareAction survey of 20 of the UK’s biggest retail ethical fund providers around six months ago found that nearly half do not publish the fund’s full holdings, which is the clearest and most effective way for customers to know exactly what they are buying into. And it’s still less than a year since JP Morgan lost billions of dollars taking massive risks that neither investors nor regulators understood that it was taking.

Five years on from the start of the global financial crisis, the call for greater transparency still needs to be heeded.

Elliot Frankal is director of ESG Communications, a PR firm specialising in responsible investment for retail and institutional investors.

Further reading:

There is a disconnect between investment and the real world

Transparency, simplicity and honesty is urgently needed in investment

90% of investors say CSR and sustainability reports are ‘essential’

FairPensions publishes ethical investment responsibility ranking

Ethical funds ‘exposed’ or the lesser of 3,000 evils?

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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