Readers of Blue & Green Tomorrow (BGT) will, we hope, have been looking at the animation and tweets coming out of Good Money Week, the annual initiative co-ordinated by UKSIF to promote the idea that “you can make money and make a difference”. UKSIF is the UK Sustainable Investment and Finance Association, a group of some 230 financial service firms with an interest in sustainability. The UKSIF team has been busy on GMW but Simon Howard found some time to answer six questions for us:
What has been the most interesting development in sustainable investment in 2016?
There is a great deal to consider – it has been a good year! I have written before for BGT on the excellent developments in fiduciary duty that we have seen from the Pensions Regulator (TPR), but I will flag it once more: TPR has told trustees of defined contribution pension funds that they SHOULD consider all material financial factors. To any sensible person this must have the effect of putting climate change on the agenda of everyone involved in providing pensions for others – whether that is in Defined Benefit (DB) or Defined Contribution (DC) form or in the context of giving advice.
Looking forward it means that a range of other factors such as the impact on the corporate reputation of aggressive corporate tax behaviour and the threat of anti-microbial resistance should begin to be discussed too. In fact I think TPR’s statements mean responsible investment will become the standard approach.
Beyond that I continue to note the monthly retail sales statistics from the Investment Association. They have a category called “ethical”. In terms of funds currently outstanding ethical accounts for about 1%, but the sales month-by-month in the past year or so have consistently been more than 3%. This is a really interesting gain in market share. Some UKSIF members have suggested it is sales in DC pension schemes showing up.
Also interesting have been some of the comments from the new Prime Minister. Her suggestion that employees and consumers be represented on company boards, and that annual pay votes be binding go further than many commentators were expecting. It all suggests that corporate responsibility may shoot up the political agenda.
Mrs May has also set up the Inclusive Economy Unit (IEU) under Rob Wilson MP. The mission of the IEU, enthusiastically espoused by Mr Wilson when he spoke at Good Money Talks on 24th October, is to encourage better use of private investment and support markets that deliver social impact as well as financial returns, to improve delivery of public services to increase social impact while bringing value for money in the commissioning of public services, and to encourage responsible business, from social enterprise startups to companies that aim at “profit with purpose”. If we start seeing developments in the social/impact space it will be extremely exciting.
And the most frustrating development?
I’m an idealist and like things to be simple. It’s extremely frustrating that the logical conclusions of COP21 and all the other work being done on responsible and sustainable investing are not being taken up more rapidly. There are successes and there is movement but it is too slow.
What is the biggest theme for sustainable investment in 2017?
UKSIF will continue to work on the fiduciary duty area. We want to translate the “should consider” guidance from TPR into more areas e.g. DB pensions and contract based DC, so we will be doing a lot of work with regulators. But with a lot of political change underway perhaps it’s fair to say that the big issue of 2017 may not yet have been identified. It’s possible for instance that the UK may see significant fiscal stimulus with a green tinge to it as part of the Brexit-economic mitigation plan. UKSIF is suggesting that!
Do you think we have reached, or are approaching, the tipping point in the take up of sustainable investment?
I don’t know about a tipping point but it certainly feels different to me. In the institutional space people know that COP21 meant something and so climate change is on the agenda. TPR opinion cited above and the retail sales figures also suggest change is coming. There is a long way to go and a recession or market collapse won’t help but I think things are going our way.
What impact do you think Brexit will have on sustainable investment?
I think sustainable investment is relatively Brexitimmune. At the bluntest level CO2 priced in sterling or euros is still CO2. But I don’t think a UK government could seriously retreat from existing EU-inspired regulation and if we get a Democrat president in the USA I don’t think the global drive will ebb. As I said above we may even see a fiscal package with a greenish tinge, certainly that is what we will be pushing for. People more expert than me tell me that the UK is already ahead of the EU in certain areas of climate regulation and I don’t expect that to change. Famous last words. I am worried about fracking, especially if it is proposed as anything other than a bridge technology, but I suspect the protests we will see as fracking comes in will tend to drive “our” issues up the political agenda and not down. Certainly Mrs May’s comments on corporate governance do not suggest she is an opponent of change and responsible attitudes. I may be wrong. I hope not. We should remember that the government has a very small majoritythey can’t be too radical in any area without a referendum behind them.
If you could make one change to benefit sustainable investment, what would it be?
That’s a very wide question isn’t it? I’m from a fund management background and so my answer will be pretty prosaic- no doubt your other contributors have the really big picture answer. At one level proper pricing of externalities would be a game changer. Combine that with more transparency throughout the financial services value chain and we may get somewhere quite fast. The practical answer for 2017 is as abovemore fiduciary duty in regulation.
The UK Sustainable Investment and Finance Association (UKSIF) is the membership association for sustainable and responsible financial services. We promote responsible investment and other forms of finance that support sustainable economic development, enhance quality of life and safeguard the environment. We also seek to ensure that individual and institutional investors can reflect their values in their investments.
This article was first published in our latest Guide to Sustainable Investment
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.
5 Easy Things You Can Do to Make Your Home More Sustainable
Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.
1. Weather stripping
If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.
Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.
Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.
2. Programmable thermostats
Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.
Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!
3. Low-flow water hardware
With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.
Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.
Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.
4. Energy efficient light bulbs
An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.
New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.
5. Installing solar panels
Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.
Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.
From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!
These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.