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Telegraph article ‘wrong’ about ethical investment

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Sustainable investment specialists have rallied to defend ethical investing, after an article in The Telegraph yesterday questioned whether the strategy can be a profitable one.

The journalist, Jill Insley, wrote, “Despite occasional bursts of interest from investors, the sector has never really taken off, and sceptics are not in short supply.”

But Penny Shepherd, chief executive of the UK Sustainable Investment and Finance Association (UKSIF), described Insley’s assertion as “wrong”, and referenced recent figures from the Global Sustainable Investment Alliance (GSIA), which found that some $13.6 trillion (£8.6 trillion) was invested sustainably or responsibly worldwide.

This is including the £11 billion invested in the UK’s green and ethical retail funds – a figure that has risen from around £4 billion a decade ago.

Mark Robertson, head of communications at responsible investment research firm EIRIS, said, “Many of the world’s largest investors, including large pension funds and government funds are integrating long-term sustainability issues into investment decisions as they [realise] the investment case for doing so.”

He added that assets under management by signatories of the UN-backed Principles for Responsible Investment (PRI) now exceeded $32 trillion (£21 trillion) – totalling 15% of the world’s investable assets.

Although the Telegraph piece sets off with a somewhat negative outlook into ethical investment, it ends with a testimonial from Mary Chadwick, who “invested in ethical funds for their performance rather than her principles”. The journalist, Insley, also speaks to John Ditchfield, co-chair of the Ethical Investment Association and financial adviser at Barchester Green, who picks out some ethical funds that have performed admirably over the last few years.

However, within the first few paragraphs, Mark Dampier of independent financial advisory firm Hargreaves Lansdown is also quoted as describing ethical funds as “a waste of money unless you are ‘ethical’”.

‘Press quotes are very selective’

Blue & Green Tomorrow contacted Dampier for a further comment. He said, “Ethical funds tend to be small cap in nature, so they will tend to do well when small caps do […] However, a fund manager is tying one hand behind his back as he rejecting lots of stocks.”

Dampier used the same phrase when quoted in a City AM article in November that said how ethical funds had witnessed the “highest drop in retail sales on record”. This decline was later revealed to be true of the wider investment market; and not just the ethical one.

Arguments on what is ethical [or] unethical rage all the time; they are not black and white”, Dampier added.

Clients buy a wide range of investments from us; it is not up to us to determine what they can or can’t buy by the use of subjective judgement. It of course has to be legal. We have no prejudice against ethical funds but generally […] they don’t come through our screens and they limit the number of stocks a fund manager can buy.”

When asked whether there were any moral or ethical issues to consider when investing, Dampier said this would be “one for an individual to decide, not me for them.”

With regards to The Telegraph’s choice of angle for the article, he added, “Remember the press quotes are very selective; they give you little chance to give perspective.”

The original Telegraph article and Blue & Green Tomorrow's rebuttal side-by-side on Google News.

Tobacco: investing in death

In Insley’s piece, Dampier also makes the point that tobacco stocks have shot up up 500% since 2000, adding, “Just being green in itself is not a guaranteed way to make money.”

Tackling this point specifically, Penny Shepherd of UKSIF told Blue & Green Tomorrow, “I remain surprised that personal finance pages report on the financial performance of tobacco stocks so approvingly when it is well accepted that tobacco is an addictive drug that kills people.

This contrasts with the recent debate in the US about the ethics of holding gun stocks.

From a more financial angle, it would also be good if personal finance commentators highlighted more regularly that tobacco stocks form only a small part of the market and prudent diversification should therefore prevent them making a major difference to the performance of a portfolio.”

However, Shepherd added that some mainstream commentators carried the misconception that ethical investment was all about excluding stocks, when in fact, the real growth area is in impact investment (which is predicted to grow by 12.5% this year, to £5.6 billion globally) and using positive approaches in selecting stocks.

On a more general theme, Clare Brook, managing partner at WHEB Asset Management, said the article fails to tackle the issue of future proofing: “If people believe that oil and gas companies and tobacco companies are going to produce big returns over the next few decades, then they should put their pension funds in those.

But if climate change, resource shortages, demographic shifts and the pace of environmental legislation carry on apace, then the global economy will have to adapt big time and a whole raft of different companies will be future winners.”

Further reading:

‘There are no moral or ethical considerations when investing’

$13.6tn invested sustainably worldwide, says study

What kind of investor are you?

Sustainable investment flourishes amongst European high net-worth individuals

The Guide to Sustainable Investment 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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