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Economy

The sustainable investment tipping point is now

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With ethical funds recently showing greater gains over their conventional peers over the last 12 months, high net-worth investors putting an increasing portion of their wealth into sustainability, 22% of all funds invested globally having a sustainable aspect and 74% of advisers reporting requests for ethical financial advice, the tipping point has arrived.

The tipping point was popularised in a book of the same name by author Malcolm Gladwell. It describes the moment when “a previously rare phenomenon becomes rapidly and dramatically more common.”

In climate science, it describes a transition from a stable state through a potentially painful transition period to a future stable state. Boy, have we got that painful transition to look forward to.

Sustainable, responsible and ethical investment was a rare phenomenon but has gradually become more mainstream, illustrated in the figures above, as awareness of the social and environmental connections and impacts of investment become more well-known and readily understood.

Climate change, population growth, resource scarcity and environmental degradation used to be the concern of a sneered-at enclave of “sandal wearing, muesli knitting, joss stick burning, bell clapping, environMENTALISTS” (the terms and emphasis are those of many bloggers, analysts and journalists).

In reality, these Malthusian ‘doom mongers’ have been proved right, and to an extent which probably surprised and depressed even them. But now is not a time for, “I told you so.”

The social concerns of religious investors and charitable fund trustees have figured greatly in the sector, giving it an ‘ethical’ badge which focuses on excluding ‘sin stocks’ (and why not – if your faith proscribes something or your charity challenges some issue, then it would be hypocritical to invest in that thing) but it describes a small, but vital, part of the sustainable investment sector today.

While this is a bit of a generalisation, another tipping point is that a new generation of accumulating (gathering together or acquiring an increasing number or quantity of assets), environmentally-conscious, digitally-connected 40-somethings have just now entered the investor space.

This is happening just as the (again, another generalisation) environmentally-unaware and digitally-unconnected generation starts decumulating (the use of accumulated assets to fund retirement income or other income requirements).

They are demanding social and environmental issues to be considered alongside the more red blooded and essential aspects of investment diversification, growth and income.

On hand to ‘help and guide’ the new generation of investors is an army of naysaying journalists, advisers and financial institutions hoping to dissuade them and encourage them to stick to the bankrupt historic model of unsustainable, irresponsible and unethical investment. The current model of investment they are wedded to is designed for yesterday’s investors, not tomorrow’s.

For these unreconstructed media, intermediaries and institutions, this shift may be fatal or at least prove to be a painful transition.

If the journalist you’re reading, person who is advising you or product literature you’ve been given, dismisses sustainability, responsibility and ethics, it’s time to change who you read, who advises you and who you buy from. Especially if you have children who will inherit the world you have created through what you invest in.

In a classic rear-guard action, the naysayers will initially dismiss the very idea of sustainability, then the evidence supporting the idea and finally the person passing on the message. They will then change the terms of the debate.

Performance was “poor”, but now that it’s better, it hasn’t been better “over the long-term”. They now say, “Look at all those funds which include ‘unethical’ stocks”, or haven’t signed up to various codes of practices, despite “claiming” to be ethical or sustainable.

We’ve seen these diversionary tactics before: over slavery, universal suffrage, civil rights, asbestos, tobacco and climate change. Incumbent industries and their subsidised friends in the media have no interest in seeing the status quo, err, ‘un-status quo-d’. He who pays the piper, and all that.

They cannot make the connections between ecology, society and economy because they never look that closely, or don’t want to understand how the systems interact.

The increasing desire to match personal values with investment value is often met with eye-rolling, patronising, weary indignation and trivial diversions.

What? You say you don’t want to screw up the planet and its people for a marginally better profit today? Tsk, how very sweet and naive. Tobacco is a perfectly good defensive stock even if it does means selling cancer sticks to poor children in Africa. It’s where the growth is (both shareholder and malignant). Pumping toxic substances into the air, land and sea may be poisoning your children but it’s a fair price to pay for an extra fraction of a per cent on your portfolio. Can you afford not to, I ask you? No, really it is worth it. Hello? Why are you walking out?

In the coming period of volatility, uncertainty, complexity and ambiguity, sustainable, responsible and ethical investment simply represents a smart diversification for the sensible and even cautious investor. Whatever investment journals and financial services say.

And let’s not forget, for all the arguments about performance, volatility and possible inconsistencies, in all societies, faiths and arts (art itself, literature, drama, music and films), it is rarely the reckless, profiteering, selfish individual who is the hero, but the responsible, generous and selfless ones. Exclude from that the dysfunctional individuals who see Gordon Gecko (Wall Street), Jim Young (Boiler Room) and Blake (Glengarry Glen Ross) as role models.

We choose not to be part of the former anti-heroes of inertia and despair, but to be part of the latter, infinitely more enlightened group. These pioneers and disruptive voices will be the future heroes of investment and innovative enterprise and we salute them.

Further reading:

35% of investors are self-proclaimed ethical investors. This is no ‘damp squib’

‘There are no moral or ethical considerations when investing’

Ethical investment: better a diamond with a flaw, than a pebble without

There is such a thing as an unethical investment

The Guide to Sustainable Investment 2013

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

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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Economy

Report: Green, Ethical and Socially Responsible Finance

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“The level of influence that ethical considerations have over consumer selection of financial services products and services is minimal, however, this is beginning to change. Younger consumers are more willing to pay extra for products provided by socially responsible companies.” Jessica Morley, Mintel’s Financial Services Analyst.

Consumer awareness of the impact consumerism has on society and the planet is increasing. In addition, the link between doing good and feeling good has never been clearer. Just 19% of people claim to not participate in any socially responsible activities.

As a result, the level of attention that people pay to the green and ethical claims made by products and providers is also increasing, meaning that such considerations play a greater role in the purchasing decision making process.

However, this is less true in the context of financial services, where people are much more concerned about the performance of a product rather than green and ethical factors. This is not to say, however, that they are not interested in the behaviour of financial service providers or in gaining more information about how firms behave responsibly.

This report focuses on why these consumer attitudes towards financial services providers exist and how they are changing. This includes examination of the wider economy and the current structure of the financial services sector.

Mintel’s exclusive consumer research looks at consumer participation in socially responsible activities, trust in the behaviour of financial services companies and attitudes towards green, ethical and socially responsible financial services products and providers. The report also considers consumer attitudes towards the social responsibilities of financial services firms and the green, ethical and socially responsible nature of new entrants.

There are some elements missing from this report, such as conducting socially responsible finance with OTC trading. We will cover these other topics in more detail in the future. You can research about Ameritrade if you want to know more ..

By this report today: call: 0203 416 4502 | email: iainooson[at]mintel.com

Report contents:

OVERVIEW
What you need to know
Report definition
EXECUTIVE SUMMARY
The market
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
The consumer
For financial products, performance is more important than principle
Competition from technology companies
Financial services firms perceived to be some of the least socially responsible
Repaying the social debt
Consumer trust is built on evidence
What we think
ISSUES AND INSIGHTS
Creating a more inclusive economy
The facts
The implications
Payments innovation helps fundraising go digital
The facts
The implications
The social debt of the financial crisis
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
PUTTING FINANCIAL SERVICES IN AN ETHICAL CONTEXT
An ethical economy
An ethical financial sector
Ethical financial services providers
GREEN, ETHICAL AND SOCIALLY RESPONSIBLE ISSUES IN FINANCIAL SERVICES
The role of investing
Divestment
The change potential of pensions
The role of trust
Greater transparency informs decisions
Learning from past mistakes
The role of innovation
Payments innovation: Improving financial inclusion
Competition from new entrants
The power of new money
The role of the consumer
Consumers empowered to make a change
Aligning products with self
THE CONSUMER – WHAT YOU NEED TO KNOW
For financial products, performance is more important than ethics
Financial services firms perceived to be some of the least socially responsible
Competition from technology companies
Repaying the social debt
Consumer trust is built on evidence
Overall trust levels are high
THE ETHICAL CONSUMER – SOCIALLY RESPONSIBLE ACTIVITIES
Payments innovation can boost charitable donations
Consumer engagement in socially responsible activities is high
Healthier finances make it easier to go green
SOCIALLY RESPONSIBLE COMPANIES
37% unable to identify socially responsible companies
Building societies seen to be more responsible than banks….
….whilst short-term loan companies are at the bottom of the pile
CONSUMER TRUST IN THE BEHAVIOUR OF FINANCIAL SERVICES COMPANIES
Overall trust levels are high
Tax avoidance remains a major concern
The divestment movement
Nationwide significantly more trusted
Trust levels remain high
CONSUMER ATTITUDES TOWARDS GREEN AND ETHICAL FINANCIAL PRODUCTS
For financial products, performance is more important than principle
Socially conscious consumers are more concerned
CONSUMER ATTITUDES TOWARDS TRANSPARENCY
Strategy reports provide little insight for consumers
Lack of clarity regarding corporate culture causes concern
Consumers want more information
THE ROLE OF FINANCIAL SERVICES FIRMS IN SOCIETY
The social debt of the financial crisis
THE SOCIAL RESPONSIBILITIES OF FINANCIAL SERVICES FIRMS
For consumers, financial services firms play larger economic role
Promoting financial responsibility
CHALLENGER COMPANIES AND SOCIAL RESPONSIBILITY
Consumer trust is built on evidence
The alternative opportunity
The target customer

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