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A new beginning for sustainable investment in the UK

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The UK’s sustainable investment industry has a new face among its leaders. Alex Blackburne spoke with Simon Howard, who on Tuesday began work as chief executive of the UK Sustainable Investment and Finance Association (UKSIF).

Around 24 hours ago, the sports world was rocked when Sir Alex Ferguson revealed his intention to step down as Manchester United manager at the end of the current season, ending his 26-year stint at the club.

Sir Alex’s successor, fellow Glaswegian David Moyes, has huge shoes to fill, and it remains to be seen if he will slip into them comfortably.

Rewinding 24 hours before Ferguson’s decision, though, the sustainable investment industry was embarking on a new era of its own – albeit one that is unlikely to generate as much interest as the goings-on at Old Trafford. However, its ramifications could well be far more significant.

The change in question is Simon Howard’s appointment as chief executive of UKSIF – the sector’s trade body. Howard – like Manchester United’s new boss – has similarly spacious footwear to fill.

He is replacing Penny Shepherd, who had led UKSIF since 2005. Under her management, the organisation, and sustainable investment more generally, made leaps forward, to the point where green and ethical retail investment now accounts for £11 billion in the UK, compared to just over £6 billion when she took over.

Shepherd was awarded an MBE in 2000 for “services to sustainable economic development and socially responsible investment”. She will remain at UKSIF in an advisory capacity until June.

We will achieve significant change more rapidly working with the system, working in the system, than perhaps protesting

But Howard, who has held senior roles at Liverpool Victoria, Friends Provident and 3i Asset Management, has experience in the sustainable finance sector through his role as head of sustainable financial markets at Forum for the Future. Having moved to replace Shepherd, he is well-equipped to continue her sterling work, but is, by his own admission, still relatively new to sustainability.

I was a conventional, mainstream investor and I became more and more aware of sustainability issues”, he says at the Hoxton Hotel in Shoreditch, just a few minutes’ walk from UKSIF – his new home.

I hope I’ve always been an investor rather than a speculator with a focus on the long-term. I was an equity man, and when I was buying shares, there was a reason for doing so – namely that you could see value being created in the long run.

The longer you push out your analysis looking for value, the more sustainability issues come to light.

At a personal level, I was a kind of unwilling convert to climate change because it clearly was ‘an inconvenient truth’ given what I was doing, but it’s undoubtedly happening, and that’s got to be factored in to how you view the world and what you do in it.

I’d done investment for 20 or so years and was ready for a change, so all of those things came together over the past few years to make me think that I wanted to do something in sustainability.”

He admits that sustainability crept up on him, rather than there being a road to Damascus moment. Shrinking ice cover in the Arctic; warmer and warmer summers; droughts in places that didn’t normally have droughts: just three of the signs that alerted him to climate change. This was a very real threat that needed to be tackled pragmatically but quickly.

Howard worked in mainstream investment for two decades. As is so often the case with people in the sustainability space, their experience with conventional finance and the slow pace of change is ultimately what encouraged him to take the leap.

But instead of sticking a sustainable carrot out to entice these people over to a different, more long-term way of thinking working in the sustainability sector, Howard explains that change needs to happen from within. Not so much making sustainable investment mainstream as making mainstream investment sustainable.

What we don’t necessarily want is loads of grey-haired men like me leaving the finance system to work with NGOs. What we want to do is to help the grey-haired men in influential positions in financial institutions stay there and make the increasingly commercially attractive move to enhanced sustainability, and I hope to do that”, he says.

We do need significant change, and the more rapidly it happens, the better. My view is that we will achieve that more rapidly working with the system, working in the system, than perhaps protesting.

So I’m very happy to be leading a trade body working with respected names throughout the whole gamut of investment and finance.”

Howard grew up in Warwick. His father was a librarian; his mother a teacher. He’s married to a doctor, has three children and lives in Cobham, Surrey.

People in finance are very bright, and the intellectual case for sustainability in investment and finance now seems so powerful that I think we will see changes coming

While the bulk of his career has been spent in investment and finance, his working life had rather different beginnings. After reading history at Durham, his first job was with Vaux, a local brewery located in the north-east. He then moved on to Allied Breweries in Surrey, before becoming the firm’s area manager for Kent.

His job was to work with tenants – the entrepreneurs who rented the pubs from the brewery. But when the monopolies and mergers commission came along in the late 80s, it was clear that this structure was under threat. Howard swiftly left.

He completed a master’s in business administration (MBA) and became interested in how the City worked. In 1990, he began his City career in the investment management arm of RBS. In 1994 he joined 3i and in 2002 became managing director of 3i Asset Management. Since then he has been head of investments at Friends Provident and group chief investment officer at Liverpool Victoria.

One of his first jobs as UKSIF chief executive is to review the organisation’s near-term and long-term strategies.

I  want to talk to as many members as I possibly can, and find out what it is they want and how well they think we’re doing”, Howard says.

I will then take that to our board, discuss that in the context of what we and the board think needs to be done, and see where there’s a good overlap.

The strategy review is going to be inclusive. We have limited resources; we need to focus them where can we do most good for our cause and our members.”

John Ditchfield, co-chair of the Ethical Investment Association (EIA) and managing partner at financial advisory firm Barchester Green – who also sits on UKSIF’s board – said recently that asking about ethical values “should be integral to the know-your-client process” for financial advisers. Howard agrees.

Advisers play an absolutely key role [in encouraging sustainable investment]”, he says.

This is something that we think advisers should be asking their clients – probing them on what they want. Someone who is maybe trying to live a sustainable life and is conscious they need to save for a pension may simply not know there are sustainable pension savings options available.

In a sense, we need the adviser to offer them the option and to raise that topic. I think there’s an education role for member organisations like UKSIF. It’s a big job; a big piece of work to do.”

But serious investment advice is, more often than not, focused on a smaller wealthy minority. Therefore, Howard says, we need to come up with a way of encouraging the majority to move their money to sustainable options.

National Ethical Investment Week, which is in its sixth year in 2013, is just one of the many avenues that UKSIF is using to spread the word about the industry.

I think the case [for sustainable investment] is so overwhelming that it will eventually happen naturally but that could well be too late and so we need to push”, Howard explains.

I sense a lot of this –sensible fact based arguments linked to diversification, new areas of growth and liability matching,  that make a strong case for sustainable investment for institutional and retail investors- is out there just off stage. But each month and each year that passes makes it clear it’s not going to go away. It’s not a fashion which someone can ignore. It is the future; it’s going to have to be considered by anyone managing or owning assets.

I think the tide could be beginning to run our way. People in finance, it seems to me, are very bright, and the intellectual case for sustainability and in particular, sustainability in investment and finance, now seems so powerful that I think we will see changes coming.

This aim of making it mainstream is a realistic aim, and is one that we should all work towards. And I think we can do it.”

Further reading:

New chief executive unveiled for sustainable investment trade body

Understanding how your savings and investments are used is integral to sustainability

The dynamic future of sustainable investment

$13.6tn invested sustainably worldwide, says study

The Guide to Sustainable Investment 2013

Editors Choice

2017 Was the Most Expensive Year Ever for U.S. Natural Disaster Damage

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Natural Disaster Damage
Shutterstock / By Droidworker | https://www.shutterstock.com/g/droidworker

Devastating natural disasters dominated last year’s headlines and made many wonder how the affected areas could ever recover. According to data from the U.S. National Oceanic and Atmospheric Administration (NOAA), the storms and other weather events that caused the destruction were extremely costly.

Specifically, the natural disasters recorded last year caused so much damage that the associated losses made 2017 the most expensive year on record in the 38-year history of keeping such data. The following are several reasons that 2017 made headlines for this notorious distinction.

Over a Dozen Events With Losses Totalling More Than $1 Billion Each

The NOAA reports that in total, the recorded losses equaled $306 billion, which is $90 billion more than the amount associated with 2005, the previous record holder. One of the primary reasons the dollar amount climbed so high last year is that 16 individual events cost more than $1 billion each.

Global Warming Contributed to Hurricane Harvey

Hurricane Harvey, one of two Category-4 hurricanes that made landfall in 2017, was a particularly expensive natural disaster. Nearly 800,000 people needed assistance after the storm. Hurricane Harvey alone cost $125 billion, with some estimates even higher than that. So far, the only hurricane more expensive than Harvey was Katrina.

Before Hurricane Harvey hit, scientists speculated climate change could make it worse. They discussed how rising ocean temperatures make hurricanes more intense, and warmer atmospheres have higher amounts of water vapor, causing larger rainfall totals.

Since then, a new study published in “Environmental Research Letters” confirmed climate change was indeed a factor that gave Hurricane Harvey more power. It found environmental conditions associated with global warming made the storm more severe and increase the likelihood of similar events.

That same study also compared today’s storms with ones from 1900. It found that compared to those earlier weather phenomena, Hurricane Harvey’s rainfall was 15 percent more intense and three times as likely to happen now versus in 1900.

Warming oceans are one of the contributing factors. Specifically, the ocean’s surface temperature associated with the region where Hurricane Harvey quickly transformed from a tropical storm into a Category 4 hurricane has become about 1 degree Fahrenheit warmer over the past few decades.

Michael Mann, a climatologist from Penn State University, believes that due to a relationship known as the Clausius-Clapeyron equation, there was about 3-5 percent more moisture in the air, which caused more rain. To complicate matters even more, global warming made sea levels rise by more than 6 inches in the Houston area over the past few decades. Mann also believes global warming caused the stationery summer weather patterns that made Hurricane Harvey stop moving and saturate the area with rain. Mann clarifies although global warming didn’t cause Hurricane Harvey as a whole, it exacerbated several factors of the storm.

Also, statistics collected by the Environmental Protection Agency (EPA) from 1901-2015 found the precipitation levels in the contiguous 48 states had gone up by 0.17 inches per decade. The EPA notes the increase is expected because rainfall totals tend to go up as the Earth’s surface temperatures rise and additional evaporation occurs.

The EPA’s measurements about surface temperature indicate for the same timespan mentioned above for precipitation, the temperatures have gotten 0.14 Fahrenheit hotter per decade. Also, although the global surface temperature went up by 0.15 Fahrenheit during the same period, the temperature rise has been faster in the United States compared to the rest of the world since the 1970s.

Severe Storms Cause a Loss of Productivity

Many people don’t immediately think of one important factor when discussing the aftermath of natural disasters: the adverse impact on productivity. Businesses and members of the workforce in Houston, Miami and other cities hit by Hurricanes Harvey and Irma suffered losses that may total between $150-200 billion when both damage and sacrificed productivity are accounted for, according to estimates from Moody’s Analytics.

Some workers who decide to leave their homes before storms arrive delay returning after the immediate danger has passed. As a result of their absences, a labor-force shortage may occur. News sources posted stories highlighting that the Houston area might not have enough construction workers to handle necessary rebuilding efforts after Hurricane Harvey.

It’s not hard to imagine the impact heavy storms could have on business operations. However, companies that offer goods to help people prepare for hurricanes and similar disasters often find the market wants what they provide. While watching the paths of current storms, people tend to recall storms that took place years ago and see them as reminders to get prepared for what could happen.

Longer and More Disastrous Wildfires Require More Resources to Fight

The wildfires that ripped through millions of acres in the western region of the United States this year also made substantial contributions to the 2017 disaster-related expenses. The U.S. Forest Service, which is within the U.S. Department of Agriculture, reported 2017 as its costliest year ever and saw total expenditures exceeding $2 billion.

The agency anticipates the costs will grow, especially when they take past data into account. In 1995, the U.S. Forest Service spent 16 percent of its annual budget for wildfire-fighting costs, but in 2015, the amount ballooned to 52 percent. The sheer number of wildfires last year didn’t help matters either. Between January 1 and November 24 last year, 54,858 fires broke out.

2017: Among the Three Hottest Years Recorded

People cause the majority of wildfires, but climate change acts as another notable contributor. In addition to affecting hurricane intensity, rising temperatures help fires spread and make them harder to extinguish.

Data collected by the National Interagency Fire Center and published by the EPA highlighted a correlation between the largest wildfires and the warmest years on record. The extent of damage caused by wildfires has gotten worse since the 1980s, but became particularly severe starting in 2000 during a period characterized by some of the warmest years the U.S. ever recorded.

Things haven’t changed for the better, either. In mid-December of 2017, the World Meteorological Organization released a statement announcing the year would likely end as one of the three warmest years ever recorded. A notable finding since the group looks at global land and ocean temperature, not just statistics associated with the United States.

Not all the most financially impactful weather events in 2017 were hurricanes and wildfires. Some of the other issues that cost over $1 billion included a hailstorm in Colorado, tornados in several regions of the U.S. and substantial flooding throughout Missouri and Arkansas.

Although numerous factors gave these natural disasters momentum, scientists know climate change was a defining force — a reality that should worry just about everyone.

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Environment

How to be More eco-Responsible in 2018

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eco-responsible
Shutterstock / By KENG MERRY Paper Art | https://www.shutterstock.com/g/kengmerrymikeymelody

Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.

Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:

1. Energy – produce it, save it

If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.

It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.

While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.

energy efficient

Shutterstock Licensed Photo – By My Life Graphic

Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!

2. Don’t be just another tourist

Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.

3. Let your beauty be also eco-friendly

eco-friendly

Shutterstock / By Khakimullin Aleksandr

We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t  mean that some of the product’s ingredients haven’t been tested on some poor animal.

To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.

It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.

4. Know thy recycling

People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.

People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.

5. Fashion can be both eco-friendly and cool

Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.

All in all

The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.

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