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Bringing social investment into the mainstream

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Will the launch of Threadneedle’s Social Bond fund bring social investment into the mainstream?

Getting acceptable financial returns while creating tangible social outcomes is arguably the holy grail for socially-minded investors. Surveys suggest demand for products that balance financial and social returns, the so-called ‘double bottom line’, is high. Sustainable bank Triodos reported last year that nearly 3 million investors could consider social investment in 2014.

The challenge for some social investment products is that their rates of return are simply not that compelling for the mainstream. For investors motivated by the core social aspect of this type of investment, this may not be a major problem; they’re happy making a smaller return if they know their money is actively doing some good. Many bond-style products also lack liquidity – meaning investors’ money is locked up for fixed terms, and they can’t convert their investments into cash very easily.

But there is a new fund on the market that aims to address both of these potential barriers. Threadneedle Investments – which has nearly £90 billion in funds under management – says its UK Social Bond fund is the first social investment fund with daily liquidity, allowing investors to take out their returns anytime they want.

Launched with an initial investment of £10m from social investment bank Big Society Capital, the fund has been developed in partnership with Big Issue Invest – the Big Issue magazine’s investment arm which now acts as social adviser to the fund.

Part of the fund’s earnings goes towards helping Big Issue Invest in its work financing social enterprises, adding more social value to any potential investment. Meanwhile, Threadneedle will contribute a portion of its fee to the Threadneedle Foundation, a dedicated entity through which the company provides support for charitable activities.

The fund has a strong emphasis on social housing, which makes up a quarter of its holdings, while healthcare and education are also represented well. There are sectors that it invests in – for example financial services and utilities – which may not be, on the face of it, ‘social’ investments. However, fund manager Simon Bond justifies this by saying the fund’s impact on the economy is social and its geographical focus is firmly on the regions – and not on areas already faring well economically.

Speaking at a launch event for the fund at Southwark Cathedral last week, Bond addressed the misconception that investing with social, ethical or sustainability factors in mind automatically brought about lower returns.

We don’t believe that you do have to give up financial return to achieve social aims. We didn’t believe it when we put the model for the portfolio together and we don’t believe it two months in”, he said.

We think there are examples out there whereby you can have both – you can have your cake and eat it.”

He was also asked whether he had taken any lessons from the socially responsible investment (SRI) world, which the mainstream investment community often looks at with some cynicism.

He said, “Cynicism does exist. That is a concept we have come across, funnily enough. And it’s something that we have to deal with every day. I think the way that you deal with cynicism is you deal with it in a very calm, measured manner, and you quietly sit down and explain exactly what it is you’re trying to do.”

Meanwhile, Sarah Forster of Big Issue Invest, who was heavily involved in creating the UK Social Bond fund, added that mainstream institutions were generally not interested in social ventures. To get their attention, she said that there was clearly a need for “a product that had credible social value creation but also would meet the liquidity and yield demands from the market”.

This lack of products is hampering the market’s growth. In a panel discussion at the Threadneedle event, Alexander Hoare – a partner at the private bank C Hoare & Co – said he had written to 10,000 wealthy customers inviting them to express an interesting in social investment. Just four replied. That said, he explained that it was very much a “chicken and egg” scenario, in that as more products are introduced, this would be met with increased demand.

Bond agreed, adding, “Partly, we’re launching this fund in order to prove that demand is out there. Build it and they will come.”

Hoare added that part of the problem – and indeed, much of the sector’s growth – rested on the shoulders of financial advisers who were advising interested clients.

He recalled a conversation with people from a discretionary portfolio management firm, in which he asked whether social investment could be included in their clients’ portfolios. They responded by reeling off concerns to do with risk, returns, liquidity and regulation. A similar meeting with a group of independent financial planners was also unsuccessful.

These two communities, plus a range of others, still need convincing about what social investment offers. In theory, investors may want their money to do good, but if their advisers are preventing them from doing so, the sector’s growth is stunted. This is exactly the reason why Blue & Green Tomorrow is doing a series of sustainable investment bootcamps in 2014, specifically educating financial advisers about the benefits of investing this way.

While the launch of the Threadneedle UK Social Bond fund is by no means the sole answer to mainstreaming social investment, it could be the catalyst the industry needs – but only if it performs how its managers suggest it will perform, both financially and socially. A failure on either of these aspects could damage the sector’s reputation.

Ultimately, we need a whole host of similar products to truly make the sector a viable investment for the mainstream. Speaking at the Southwark Cathedral event last week, Big Issue Invest chief executive Nigel Kershaw (pictured) described social investment as “finance to transform society”. This may sound grandiose, but in actual fact it is an accurate and exciting tagline for a sector whose time in the spotlight appears very close indeed.

In accordance with the Financial Services and Markets Act 2000, Blue & Green Communications Limited does not provide regulated investment services of any kind, and is not authorised to do so. Nothing in this article and all parts herein constitute or should be deemed to constitute advice, recommendation, or invitation or inducement to buy, sell, subscribe for or underwrite any investment of any kind. Any specific investment-related queries or concerns should be directed to a fully qualified financial adviser.

Further reading:

Threadneedle and Big Issue Invest join forces for UK Social Bond fund

Investors to be given opportunity to invest in Big Society

Fiona Woolf: London must lead in social impact investment

Sir Ronald Cohen: measuring of social investment outcomes a ‘breakthrough’

Cameron: ‘social investment can be a great force for social change on the planet’

Environment

How to be More eco-Responsible in 2018

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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

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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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Energy

Top 5 Changes You can Make in Your Life to Reduce Your Carbon Footprint

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Saving money and reducing your carbon footprint? What isn’t to love? - Image from Shutterstock - https://www.shutterstock.com/g/thodonal88

In a world, where war rages and global warming threatens our very existence, the inhabitants of earth need to be extra vigilant in their efforts to go green. This includes reducing your carbon footprint on the earth and leading a more sustainable life.

Many homeowners feel perplexed by all of the options available to reduce their carbon footprint. They may even feel (falsely) that making their household more green will fail to make that much of a difference in the fight to save our planet.

Even a single home going green has a massive impact on the environment. We can win this battle on home at a time. If you’re interested in accepting the challenge of making your household a green home, read on below for a few of the top changes you can make in your life to reduce your carbon footprint. We all stand to benefit from making the earth safer for future generations – and your wallet won’t complain when you start to see the savings in annual energy costs.

Switch From Dirty Energy to Clean Solar

The ION Solar reviews tell it all–solar is the best way to go. Whether your goal is to slash your energy bills, or to reduce your carbon footprint, the sun is a fantastic source of renewable energy.

It’s important to get past the hype from solar installers. Instead, listen to the plethora of impartial customer reviews that mention everything from a $20 energy bill, to the incredible feeling of knowing that you are doing your part by going green and minimizing harmful emissions in to our atmosphere.

The average investment is $15,000 to $30,000 for installation and purchase of solar panels. Optional battery power packs can help provide consistent power during both night and day. And many government agencies provide federal, state or local grants to help offset upfront investments in clean energy.

Depending on which installed you choose, your household may qualify for low-interest or zero interest loans to cover the up-front cost of your installation. And the loan payments are usually less than your current monthly power bill.

It really is a win-win, as home buyers are looking for homes that feature this technology – meaning solar power installation improves the resale value of your property.

Home Modifications

And there are a number of additional home modifications that can help improve the energy efficiency of your home. A programmable thermostat can better manage energy consumption from home cooling and heating systems while you’re away from home. And weather stripping your doors can help keep cool air in during the summer, and warm air in during the winter.

Of course, energy conservation starts at home. And this includes setting a powerful example for your kids. Teach your children how to close windows, strategically keep doors open or closed based on airflow, and encourage them to leave the thermostat alone – opting for adding or removing layers of clothing instead.

Unplug Appliances and Shut Off Electronics

Unplugging your appliances when they aren’t in use, such as the toaster and the coffee maker, has more of an impact than you might think. Set your TVs and stereos on sleep timers, instead of letting them run around the clock. The cumulative impact of wasteful electronic device usage is horrible for our environment – putting unnecessary strain on our electrical grid.

Recycle

One of the simplest and easiest ways to reduce your carbon footprint is by recycling. You are already throwing this stuff away anyway, right? It doesn’t take much more effort to just put recyclables in a separate container to be recycled, now does it?

Oh, and did I mention that you can earn money for recycling? Yes! Many cities and towns have recycling centers that will purchase your clean plastic and glass bottles for reuse.

Minimize Your Water Usage

Water is one of the easiest things to forget about when it comes to reducing your carbon footprint. Preserve water by turning off the faucet while brushing your teeth. Shorten your shower by a few minutes and turn down the heat on that water heater. You’ll be surprised at how much lower your water bill and your energy bill will be.

Saving money and reducing your carbon footprint? What isn’t to love?

These are just a few of the top ways that you can reduce your carbon footprint and start living a greener lifestyle. And we aren’t factoring in all of the advantages that we’ll reap from public investments in a smarter energy grid.

From decreasing your water usage, to switching to solar for your home’s energy needs, you will feel good at the end of the day knowing you are doing your part to save the future of this planet for generations to come!

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