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Economy

Wonga (5,853% APR), Wongate, Wronga or just plain wrong

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Back in the mists of AD2008 a conference was held at the IMAX in London by the now defunct enterprise Library House. The event had a panel discussion entitled Surviving the carnage, chaired by Charles Cohen of Probability. One of the panellists was Errol Damelin, the Wonga founder (and “loan shark”, as Cohen provocatively labelled him).

I was in attendance, and what was most fascinating about Wonga’s presentation was the mixed feelings of the audience.

There was clear excitement about a brilliantly executed and elegantly designed online lending tool that stripped out the tedium, bureaucracy and tardiness of traditional lenders. In equal measure, there was semi-revulsion at what amounted to an online ‘loan shark’. Even the hawkish and astute capitalist Doug Richard (now of School for Startups), founder of Library House, could not help but express surprise and disbelief at the APRs.

Damelin’s strong projections of substantial profits assuaged most investors’ doubts. It certainly assuaged any usury-is-sin doubt of the Church of England’s money managers. Fast-forward five years, Wonga and the church are making headlines for all the wrong (or wong) reasons.

Stella Creasy MP, a victim of recent online trolling over women on banknotes, has been waging a tireless battle against high interest rate payday lenders. We have covered the archbishop of Canterbury’s unfortunate clerical misstep over Wonga and his excellent claim of ‘competing it out of business’, versus the less-than-excellent fact that the Church of England invested in Wonga when it was a start-up.

Never one to avoid a fight, the Evening Standard’s editor Sarah Sands decided to stand by the “lean and watchful” CEO of Wonga in a strong defence of the “dynamism” of online loan sharking. I have an affinity for Sands as we were both fired under the rein of Charles Moore. We parted company thereafter.

According to Sands, “Dynamic Wonga has spotted a shift in society”.

In reality, it has done nothing more than taken one of the oldest industries in human history and translated it online. The shift they may have spotted was desperation and deprivation. Apparently, Damelin has “fizzy new ideas” on education now. Lock up your children, readers.

“The conflicts of capitalism should not be such a source of moral anguish for the business secretary, whose title suggests he is a champion of business”, Sands witters on.

This includes encouraging entrepreneurs to set up companies, create jobs, drive growth and contribute to the Treasury. Cable has been campaigning for banks to lend to small businesses. Well, welcome to the world of Wonga. Money lenders have never been popular but legitimate ones keep the economy churning.”

No, no, no.

The rather excellent Martin Lewis of MoneySavingExpert.com gives a more compelling and coherent demolition of Sand’s silliness in the Telegraph (of all places).

In his article, he takes on the archbishop directly over his original claim that, “We’re not in the business of trying to legislate you [Wonga] out of existence, we’re trying to compete you out.”

To Lewis, this is a source of disagreement with the prelate.

“Wonga and other 6,000% APR loans are the crack cocaine of the money-lending world – recent studies even suggest some people are now payday loan addicts”, he writes.

Lenders use instant apps and fast clicks to target the impulses of the ‘must have it now’ generation. Loans are processed at lightning speed, quick enough for some to apply and receive while drunk.”

While he, like us, praises the archbishop for his aim, ultimately only tight regulation will do. He adds, “We do need tight controls on this industry. Competition from the church is not enough. Costs should be capped, ads banned from kids’ TV, the application process slowed, and mandatory credit checks enforced.”

Making a profit from vulnerable people who lack the financial literacy, which Damelin decries in the coverage of the story, is unethical. Those who can’t see that need to get a grip, demand action from MPs and support Creasy in her campaign.

And finally, the UK’s moral custodians at the Guardian should question who they endorse. Back in 2010, Wonga was considered a sound tech investment and was picked for its innovation and creativity”.

There is nothing innovative or creative about high interest rate, payday lending, however slick the website and marketing are.

Further reading:

For a church, fiduciary responsibility should not trump social responsibility

Is a little sin tolerable? Ethical investment and searching for the good

Wonga, the archbishop and the Ethical Investment Advisory Group: interview

Archbishop ‘embarrassed’ at Church of England investment in Wonga backer

‘We will compete you out of existence’, Archbishop tells payday lenders

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

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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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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