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Sustainable investment is about optimisation, not maximisation

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Investors should take a leaf out of the Crown Estate’s book, and begin talking about the optimisation – rather than the maximisation – of their assets.

In July last year, the Treasury committee took evidence from the Crown Estate – the sixth largest owners of property and land in Britain. Its 360,000-acre portfolio is worth £8.1 billion, and includes Regent Street, Ascot and Windsor Great Park.

Only the Forestry Commission (2.6m acres), the National Trust (630,000 acres), the Ministry of Defence (593,000 acres), pension funds (550,000 acres) and utilities (500,000 acres) are larger rural landowners. That said, if sea beds, foreshores and commercial real estate were included, acres in the Crown Estate’s portfolio would stretch into the millions.

MPs quizzed three of the organisation’s senior employees on issues from management to performance. Some of their answers were encouraging. Chief executive Alison Nimmo said the Crown Estate’s remit was one of “optimising performance; taking a long-term, sustainable position” and claimed the Treasury was very happy with the way it conducted its business.

She pointed towards a report, co-written by the New Economics Foundation (nef), which outlines what the Crown Estate believes to be the true value of its role in the UK – in other words, not just the financials. It calls this its “total contribution”; the financial, physical and natural resources of its business, people, networks and knowledge-base.

This methodology calculated that in 2011/12, the Crown Estate added £5.23 billion in gross value to the UK economy; supported 94,000 jobs; hosted educational visits for 8,900 students and other visitors; and saved some 4m tonnes of planet-warming greenhouse gases through its rollout of forestry and use of low-carbon energy – meaning it is a net carbon sink. All impressive numbers.

But Andrew Tyrie MP, who sits on the committee, was noticeably sceptical. For him, the fact the Crown Estate didn’t conform to the status quo in its methods for assessing overall performance was seemingly troubling.

“I must admit, I am very concerned by the idea that an organisation can, effectively, using a consultant, define for itself what it considers to be its own measure of a contribution, then deviate from commercial objectives at a cost to the taxpayer, without us being at all clear either on how much has been foregone or exactly why”, he said.

“That is what I think I have been listening to this afternoon, so I am quite concerned. I do not know how other members feel.”

Despite suspicion from some quarters, the Crown Estate – whose remit is set out by a 1961 act of parliament – is admirably sticking to its guns. It continues to use of the word ‘optimisation’ rather than ‘maximisation’. This is entirely refreshing, and a mantra that would-be sustainable investors would do well to follow.

“Optimising our return is about securing sustainable, long-term growth in our business, both in terms of the revenue return we deliver to the UK Treasury for the benefit of the public finances, and the capital value of assets we manage, as required by the act”, says head of sustainability Mark Gough.

“At the core of our approach is the recognition that the value we create is greater than just commercial return and that to be successful commercially, in the long-term, we must understand and improve all of the resources at our disposal and enhance the relationships upon which our business relies.”

Gough points towards a £1.5 billion investment the Crown Estate is making across Regent Street and St James’s in London. In the last decade, it has invested £25m in Regent Street’s public realm – defined as the streets, parks, open spaces and so on that are owned by the public. Meanwhile, £320m has gone towards the St James’s Market project in London’s West End, which is being revitalised so as to return it to its former glory as a thriving hub for culture and community. Gough says the value of the holdings – and the subsequent return – is directly linked to the success of the local area and its engagement with the community.

Will Day, sustainability adviser to global consulting firm PricewaterhouseCoopers (PwC), is one of a number of people who thinks the Crown Estate is correct in wanting to be a responsible steward of Britain’s natural resources.

“There is an expectation of business these days that they’re not just there to maximise short-term returns. I’m really intrigued by the fact that some companies or organisations are now thinking through whether they exist to maximise returns or optimise returns, and for whom”, he explains.

“Do they exist solely for their investors or do they exist for, importantly for the investors, a wider set of stakeholders that might include their customers, farmers and local government and communities?”

For investors, there are lessons to be learned from this one example of sustainable business. While it is wrong to suggest that sustainable investing brings in lower financial returns than the mainstream, it is a misconception often cited as a reason to avoid any investments labelled even remotely ethical or responsible.

Using the Crown Estate’s logic, though, sustainable investors have the right to shout about their total contribution, and therefore, the total returns they accrue.

What is the environmental return from that wind farm you’re investing in, compared to the oil field you had money in previously? Is the healthcare company delivering better social returns than your investment in British American Tobacco?

In the same way we need to move the investment debate from ethics to sustainability in 2014, we need to ditch maximisation in favour of optimisation.

Gough concludes with wise words: “Optimising our investments makes an important contribution to local communities and the wider UK. We believe the approach is key to the long-term performance of our business.”

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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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