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WHEB Annual Investor Conference: model performance

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Companies have AGMs allowing management teams to update shareholders on performance and forecasts. Less common are fund investor conferences. WHEB’s well attended and informative conference on Thursday will hopefully encourage others to engage with fund investors more proactively.

15 Hatfields near Blackfriar’s Bridge claims to be London’s most sustainable venue. ISO14001 (environmental management systems) is in place, but so are cushions made from recycled airplane belts and goat hair carpets. I kid you not.

So in this green and pleasant setting, WHEB’s Listed Equity team set out their wares. In the early stages of the afternoon, the room was the perfect metaphor for runaway climate change, by being hotter than hell. It’s odd to watch various smartly pin-striped gentlemen slowly wilt until the air conditioning kicked in.

It was great to get an update on the resilient underlying investment philosophy of WHEB’s £89m fund, the spread of investments across their nine themes and the fund’s overall performance. As their recent impact report set out, it is the team’s strong conviction that, “the global economy is in the early stages of a fundamental reorientation.” And that, “sustainable investing is finally coming of age.”

Striking was the sales growth of the ~1,000 company universe WHEB picks from, relative to the slower growth of the MSCI World Index of 1,613 global stocks. The universe of companies that WHEB invests in are developing products that address the fundamental issues of demographic change, urbanisation, climate change, resource scarcity, wellbeing, education & health. Impressive is the low carbon footprint of their fund, which is 70% less than its MSCI benchmark.

 

Deploying a well-known exponential growth chart that plots population growth, various resource usage and environmental degradation WHEB’s Tim Dieppe clearly illustrated the enormous and recent impact we are having on our fragile blue and green planet.

 

Additional insight was offered by the unrivalled Mark Lewis of Kepler Chevreux who rapidly explored the challenges within the oil industry and David Lloyd-Owen of Envisager who provided a witty and powerful exposition of the water challenges we face and the very real opportunity it creates for investors.

Lewis illustrated the systemic risk within the oil industry of spiralling capex and declining output. He also demolished the shale gas myth, which is rapidly running out of gas. He pointed out that shale oil production declines by 60% in the first year of a rig’s operation, whereas more traditional rigs build up to capacity over years, plateau and then decline over a long period. The massive investment requirement for fossil fuels is untenable compared to the rapidly falling prices of renewables.

Lloyd-Owen described the unusual asset intensity of the water industry – the UK’s water infrastructure replacement value is £290b, with industry revenues of only £9b. The issue is more about how we control demand and deliver more for less, rather than developing shiny new innovations. The drought in California, droughts in Australia and floods in the UK have created the perfect storm for investment in real-time data to manage water demand.

Ted Franks of WHEB put forward Joseph Schumpeter’s famous thesis that, “Creative Destruction is the essential fact about capitalism”. A new industry emerges that destroys an old industry, redeploying capital and other resources more effectively. His collection of music is open for takers after the death of the minidisc at the hands of MP3.

Blue & Green would posit that we have severely hampered the sustainability of our global economy by protecting old and oligopolistic dirty industries, while making life difficult for new and disruptive clean industries. Not to mention, the oil super major’s aggressive and dishonest rear-guard action of funding climate change myth, doubt and denial, or denoil (neologism of the week). Has no modern capitalist read Adam Smith and the need to support and develop infant industries, while condemning and breaking up established oligopolies?

WHEB’s head of research, Seb Beloe, then discussed the excellent annual impact report, which you can download here. Using a clearly defined process, Beloe plots companies based on their environmental, social and governance (ESG) policies, and then their actual social and environmental impact. For example, a company which the fund invests in should perform well on ESG policies and reporting, but also have a positive impact on society and/or the environment.

In the question and answer session a discussion on the cost effectiveness of onshore wind, led to the perfect response, that wind creates huge amounts of energy currently, that their prevalence proves their success, and that almost all opposition to wind power is due to “aesthetics not physics”. Slam dunk.

A YouGov poll in March this year showed that 59% of the population saw any kind of tax avoidance as unacceptable, even when the difference between legal tax avoidance and illegal tax evasion was stressed by pollsters. Only 32% think it reasonable. When asked about WHEB’s view on aggressive tax avoidance Beloe said that such behaviour had been observed in three of the 67 companies they invested in and was often a ‘red flag’ of other negative corporate behaviours. WHEB engages regularly with all the companies it invests in on all ESG issues and has an exceptional voting record. 54% of their 56 engagements were wholly or partially successful in 2014.

An afternoon with WHEB was a stimulating and inspiring event. Their clear commitment to a sustainable future, combined with incredible insight and financial hard-headedness positions them perfectly for the global economic reorientation around sustainability and drift towards responsible capitalism.

We look forward to next year’s investor conference.

Photo: bionicteaching via Flickr

 

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Further reading:

WHEB investment helps cut annual air emissions by 400 tonnes

The Guide to Sustainable Investment 2014

Breaking the eight myths of sustainable and responsible investment

Responsible investment still being viewed as detrimental to returns

Private equity industry adds weight behind responsible investment

 

 

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.

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How to Build An Eco-Friendly Home Pool

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Licensed Image from Shutterstock - By alexandre zveiger

Swimming pools are undoubtedly one of the most luxurious features that any home can have. But environmentally-conscious homeowners who are interested in having a pool installed may feel that the potential issues surrounding wasted water, chemical use and energy utilized in heating the water makes having a home swimming pool difficult to justify.

But there is good news, because modern technologies are helping to make pools far less environmentally harmful than ever before. If you are interested in having a pool built but you want to make sure that it is as eco-friendly as possible, you can follow the advice below. From natural pools to solar panel heating systems, there are many steps that you can take.

Choose a natural pool to go chemical free

For those homeowners interested in an eco-friendly pool, the first thing to consider is a natural pool. Natural swimming pools utilise reed bed technology or moss-filtration to naturally filter out dirt from the water. These can be combined with eco-pumps to allow you to have a pool that is completely free from chemicals.

Not only are traditional pool chemicals potentially harmful to the skin, they also mean that you can contaminate the area around the pool if chemical-filled water leaks or is splashed around. This can be bad for your garden and the environment general.

It will be necessary to work with an expert pool builder to ensure that you have the expertise to get your natural pool installed properly. But the results with definitely be worth the effort and planning that you have to put in.

Avoid concrete if possible

The vast majority of home pools are built using concrete but this is far from ideal in terms of an eco-friendly pool for a large number of reasons. Concrete pools are typically built and then lined to stop keep out any bacteria. This is theoretically fine, except that concrete is porous and the lining can be liable to erode or break which can allow bacteria to enter the pool.

It is much better to use a non-porous material such as fibreglass or carbon ceramic composite for your pool. Typically, these swimming pools are supplied in a one-piece shell rather than having to be built from scratch, ensuring a bacteria-free environment. These non-porous materials make it impossible for the water to become contaminated through bacteria seeping into the pool by osmosis.

The further problem that can arise from having a concrete pool is that once this bacteria begins to get into the pool it can be more difficult for a natural filtration system to be effective. This can lead to you having to resort to using chemicals to get the pool clean.

Add solar panels

It is surprising how many will go to extreme lengths to ensure that their pool is as eco-friendly as possible in terms of building and maintaining it but then fall down on something extremely obvious. No matter what steps you take with the rest of your pool, it won’t really be worth the hassle if you are going to be conventionally heating your pool up, using serious amounts of energy to do so.

Thankfully there are plenty of steps you can take to ensure that your pool is heated to a pleasant temperature while causing minimal damage to the environment. Firstly, gathering energy using solar panels has become a very popular way to reduce consumption of electricity as well as decreasing utility bills. Many businesses offer solar panels specifically for swimming pools.

Additionally, installing an energy efficient heat pump or boiler to work in conjunction with your solar panels can be hugely beneficial.

Cover it!

Finally, it is worth remembering that there are many benefits to investing in a pool cover. When you cover your pool you increase its heat retention which stops you from having to power a pump or boiler to keep it warm. This works in conjunction with the solar panels and eco-friendly heating system that you have already had installed.

Additionally, you cover helps to keep out dirt and other detritus that can enter the pool, bringing in bacteria. Anything that you can do to keep bacteria out will be helpful in terms of keeping it clean.

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Features

4 Ways To Get a Green House in 2018

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green house and homes
Featured Image From Shutterstock - By Photographee.eu

Demand for green houses is surging. In 2020, almost 20% of all homes on the market will be green.

If you would like to buy a green home, this is a great time to look into it. Prices are still pretty low and there are a lot more financing options available than there were right after the recession.

If you’re thinking about buying a house, now could be a very good time to make the move! A number of factors in the housing market right now mean that you might be able to afford your dream home. Although in many parts of the country house prices are still rising, if you do your research and plan wisely, there are lots of good schemes to help you get your foot on the property ladder, or trade up to the house you’ve always wanted.

Interest Rates and Stamp Duty

Although the Bank of England raised interest rates by 0.25% recently, they remain very low, which is good news if you’re thinking of taking out a mortgage. However, rates may not stay low and it’s predicted that there’ll be a further rate rise during 2018, so don’t wait too long. Another factor that’s going to help first time buyers in particular is the Chancellor’s decision to abolish stamp duty for first timers purchasing properties for under £300,000.

Different options

For many people looking to buy a green home, raising a deposit of between 5% and 20% may not be a realistic option, in which case there are a growing number of schemes to help. Increasingly popular are shared ownership schemes, through which the buyer pays a percentage of the full value of the property (typically between 25% and 75%) and the local council or a housing association pays the rest, and takes part ownership. This is suitable for buyers who may struggle to meet the up-front costs of buying outright. There will often be a service charge or management fees to pay in addition to the mortgage. The Government’s Help To Buy scheme is a good place to start looking if you’re interested in this option. This scheme is now available to people looking to buy green homes too.

ISA Options

If you’re still saving for a deposit, another scheme is the Help to Buy ISA. You can get a 25% boost to your savings on amounts up to £200 per month with this scheme. It’s only open to first time buyers and you can claim a maximum of £3000.

Other costs

Green home buyers are going to run into a number of other ancillary costs, most of which are common to other homebuyers.

When calculating how much you can afford, it’s vitally important to remember that buying a house comes with a whole host of other costs. Depending on the cost of the property that you’re buying, you may have to pay stamp duty of anywhere between 1% and 5%. There’ll be estate agents fee if you’re also selling a property, although there are a wide range of online estate agents operating such as Purple Bricks or Right Move that have lower fees than traditional high street companies. Conveyancing costs to a solicitor can add another £1000-£3000 and you may need to take out life insurance and hire a moving firm.

There are other initial costs such as, fixing parts of the home that aren’t upto your taste. Getting new furniture to fill up all the new-found space in your new home. If you are moving away from the city, you need to consider the cost of transportation as well, as it can take up quite a lot over time. Take your time, do your homework and shop around and soon you could be getting the keys to your perfect home.

I hope this article was useful for you to learn more about the basics that you need to be aware of before you start the process of buying your first home. If you have any doubts with regards to this, let us know through the comments and we will be glad to help you out. If you have any suggestions regarding how we can improve the article, let us know them through the comments as well for us to improve.

Do you have any other reservations against buying your first home? Do you see your house as an asset or a liability? Do you think it is important for everyone to get themselves a new home? Let us know through the comments.

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