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Sustainable financial advice: IFA Julian Parrott on ‘fighting for the ethics’

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Julian Parrott, a partner at Edinburgh-based financial advisory firm Ethical Futures, gives advice to clients on sustainable, responsible and ethical investment.

He talks to Blue & Green Tomorrow about his career in financial services, Joe Strummer (who, did you know, was an ethical investor) and why he is fighting to keep ethics a part of the debate.

How did you get into sustainable, responsible and ethical financial advice as opposed to financial advice more generally?

I had spent 12 years in financial services, eight of which was as an adviser with national IFA firms. I was getting a bit fed up with the way the business was run and was looking to either start on my own or find a small firm. Whilst with Towry law in the mid, in the 90s I started to advise some clients with ethical interests (a rarity in those days) and I found that it chimed with my personal values, too.

As chance would have it, late in 1999 I saw an ad for an adviser post with a small firm specialising in ethical investment in Edinburgh. The dawn of the new millennium saw me embarking on a new stage in my career in a field that I at last believed in.

Tell us about your firm, its history, team numbers and what you see as its expertise.

I formed Ethical Futures with Martin Wight in 2005. Martin and I had worked together at Towry Law in the mid-90s. We went in different directions but I met him again when he worked at NPI and was active in promoting their Global Care ethical funds. When the broker consultant life lost its attraction for him, we joined forces and I rolled my previous business into Ethical Futures.

We started with one part-timer on 12 hours a week; we now have three full-time and one part-time support staff – a 10-fold increase to 127 hours a week. This reflects the growth of our business over the years.

We are general financial planners but with a strong investment emphasis. Under retail distribution review (RDR) rules, we are independent advisers but with an ethical and socially responsible specialism. We don’t do mainstream investment funds at all; if someone wants that, we’ll refer them on.

I think the thing that we are experts in, is actually just understanding why clients want to invest ethically. We are on the same side as our clients so we don’t see it as a hassle or constraint.

Why do you think people should consider investing sustainably, responsibly and ethically?

How long have you got? People should invest with their own convictions. I think that there are good long-term returns to be had, but don’t invest just for a new investment angle; invest because you want to make a difference.

Appropriately channelled and focused your money:

– Can start to influence the ways big business behaves
– Can help develop local community businesses
– Can support social and community projects
– Can invest in development of alternative forms of energy, recycling, waste management and water treatment
– Can help develop new initiatives in health and education
– Can fund micro–finance in developing countries
– Can make a difference

Is there a compromise to be made between getting a return on investment and ‘doing the right thing’?

I don’t think so, but I don’t care. Are you going to tell the clothing worker in Bangladesh that you really needed that extra marginal gain, so sorry, you have to continue working in a sweatshop? Or to the farmer in a developing nation: sorry, you have to keep on buying the seed for your grain because we have a nice fat GM patent and they can’t be allowed to propagate their own? Or to the tribe in Africa: sorry, you can’t farm on your land because it is needed for oil exploration and the company has given the government ministers a big bung to secure access?

We just have to take a wider world view and re-structure our economies and expectations.

Are there any sustainable, responsible and ethical funds that people should be looking into and talking to you about?

It really depends what you are looking for, there are a range of funds with different objectives that I like but they won’t suit everyone. I like the management style of the Ecclesiastical Amity and Alliance Trust Sustainable Future funds. Kames funds and Jupiter Ecology are tried and tested and pretty dark green; WHEB and Quilter Cheviot are newer firms with really interesting approaches to the sustainability sector. Not a fund, but I also really like what Abundance Generation are doing in the renewable space and real ethical banking from Triodos Bank.

What, if anything, is stopping sustainable, responsible and ethical investment from taking off in the UK?

There is still resistance out there amongst many financial advisers and investment houses don’t put enough support into promoting the sector or developing new funds. They still prefer to develop ‘flavours of the day’ type funds. There is also still the muesli muncher, hippy notion about ethical investment out there, too.

What trends have you noticed in sustainable, responsible and ethical investment in the past year?

Social impact is the thing for me. It’s in tune with the Big Society agenda (which I can buy into even though I think it’s a Tory plot to slash the welfare state) and offers a combination of financial and social dividend with a bit of localism thrown in, too.

If people do not invest sustainably, responsibly and ethically what is the biggest consequence for them?

Err, is another 2008 financial crisis enough? Try the headlong rush for shale gas or tar sands or Arctic oil, Bangladeshi sweatshops working for major fashion brands, millions of UK workers working for below a living wage – it’s happening now and we need to change the agenda!

A curved ball question, but if you were stuck on a desert island, which famous person would you like to be stuck with and why?

Can I bring Joe Strummer back to life? I saw him in concert loads of times but never got to meet him. We’d have some great debates which he loved having around a campfire and he might teach me to play guitar! Joe was an ethical investor; he was an early investor in a carbon offset business called future forests. There’s a wood dedicated to him on the Isle of Skye.

What’s your prediction for the next 10 years of sustainable, responsible and ethical investment?

It’s growing, but we have yet to reach the tipping point. I’m not sure what the catalyst will be. In terms of funds, there will probably be more emphasis on the sustainable and responsible – which is okay – but I’m going to keep on fighting for the ethics, too.

Julian Parrott is a partner at Ethical Futures.

Further reading:

2013 sustainable financial adviser of the year: Julian Parrott, Ethical Futures

Ethical investment: money with a voice

Green Dragon: Julian Parrott

The Guide to Ethical & Sustainable Financial Advice 2013

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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