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.”
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.”
New Zealand to Switch to Fully Renewable Energy by 2035
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.
How Going Green Can Save A Company Money
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
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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