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Government policy vital for impact investment growth, says US report

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Government policy is the key to helping the impact investing industry, which is poised for dramatic growth and a move into the mainstream, according to a report published by the US National Advisory Board (NAB).

The report – Private Capital, Public Good: How Smart Federal Policy Can Galvanise Impact Investing – and Why It’s Urgent – argues that for impact investment to reach a scale where it can have a positive affect on the issues the world faces today, the government and private sector need to work in partnership.

The report describes the impact investing movement as being at an “inflection point”. It points to research, which looked at 125 major fund mangers, foundations and development finance institutions, by JP Morgan and the Global Impact Investing Network. The study found $46 billion (£27 billion) of impact investments under management, an almost 20% increase on the previous year.

“But impressive as the progress sounds, impact investments still represent only 0.02% of the $210 trillion (£123 trillion) in global financial markets. For all its promise, the movement is not yet living up to its potential – which many believe to be 10 or even 20 times its current size”, the report adds.

The NAB recommends removing regulatory barriers, increasing effectiveness of government programmes and providing incentives for new private impact investments.

The US sustainable and responsible investment forum, US SIF, has welcomed the report. In particular, the organisation supports the message that public policy should be used to encourage private sector investments to consider social impact.

The report states that the Department of Labour should make it clear that fiduciaries may consider environmental, social and governmental (ESG) factors when making investment decisions and that doing so is consistent with their responsibility to act in the economic interests of the plan.

US SIF commented, “Such as statement by the Department of Labour would help to correct the confusion generated by the bulletins it issued in 2008 that fiduciaries may not make investment decisions based on ‘any factor outside the economic interest of the plan’, language that appeared to contradict its earlier guidance that fiduciary responsibility does not prelude consideration of collateral, social impact benefits that investment vehicle may offer.”

Confusion around what fiduciary duty includes has also been evident in the UK. Whilst some have argued that fiduciary duty means solely focusing on financial and economic information, others have pointed out that sustainability issues can impact on value and signal future risk.

The Law Commission launched a consultation at the beginning of the year looking at the issue. In its submission, the Principles for Responsible Investment said that whilst the law is sufficient it is being interpreted in a “highly conservative way that is discouraging actions which would be in beneficiaries’ interests”.

As a result, the organisation said there should be a focus on building up knowledge in this area and a “healthier understanding and interpretation of the law”.

Photo: Julien Harneis via Flickr

Further reading:

Impact investment: ESG practices increases risk-adjusted returns in the long term

Finance professional assemble in London for impact investment conference

Why impact investment could soon be a trillion-dollar industry

Impact investment ‘developing rapidly’, says UKSIF report

Report ‘de-risks’ impact investment to open sector up to mainstream

Environment

These 5 Green Office Mistakes Are Costing You Money

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eco-friendly green offices
Shutterstock Licensed Photo - By Stokkete | https://www.shutterstock.com/g/cyano

The sudden interest in green business is very encouraging. According to recent reports, 42% of all companies have rated sustainability as an important element of their business. Unfortunately, the focus on sustainability will only last if companies can find ways to use it to boost their ROI.

Many businesses get so caught up in being socially conscious that they hope the financial aspect of it takes care of itself. The good news is that there are plenty of ways to go green and boost your net income at the same time.

Here are some important mistakes that you will want to avoid.

Only implementing sustainability on micro-scale

The biggest reason that brands are going green is to improve their optics with their customers. Too many businesses are making very minor changes, such as processing paperwork online and calling themselves green.

Customers have become wary of these types of companies. If you want to earn their business, you are going to need to go all the way. Bring in a green business consultant and make every feasible change to demonstrate that you are a green organization from top to bottom.

Not prioritizing investments by long-term ROI

It isn’t realistic to build an entirely green organization overnight. You will need to allocate your capital wisely.

Before investing in any green assets or services, you should always conduct a long-term cost benefit analysis. The initial investment for some green services may be over $20,000. If they don’t shave your cost by at least $3,000 a year, they probably aren’t worth the investment.

Determine which green investments will have the best pay off over the next 10 years. Make these investments before anything else. Then compare your options within each of those categories.

Implementing green changes without a plan

Effective, long-term planning is the key to business success. This principle needs to be applied to green organizations as well.

Before implementing a green strategy, you must answer the following questions:

  • How will I communicate my green business philosophy to my customers?
  • How will running a green business affect my revenue stream?
  • How will adopting green business strategies change my monthly expenses? Will they increase or decrease them?
  • How will my company finance green upgrades and other investments?

The biggest mistake that too many green businesses make is being overly optimistic with these forecasts. Take the time to collect objective data and make your decisions accordingly. This will help you run a much more profitable green business.

Not considering the benefits of green printing

Too many companies believe that going paperless is the only way to run a green organization. Unfortunately, going 100% paperless it’s not feasible for most companies.

Rather than aim for an unrealistic goal, consider the option of using a more environmentally friendly printer. It won’t be perfect, but it will be better than the alternative.

According to experts from Doranix, environmental printers have several benefits:

  • They can process paper that has been completely recycled.
  • They consume less energy than traditional printers.
  • They use ink that is more environmentally friendly.

You want to take a look at different green printers and compare them. You’ll find that some will meet your needs as a green business.

Poorly communicating your green business strategy to customers

Brand positioning doesn’t happen on its own. If you want to run a successful green business, you must communicate your message to customers as clearly as possible. You must also avoid the appearance that you are patronizing them.

The best approach is to be clear when you were first making the change. I’ll make an announcement about your company‘s commitment to sustainability.

You also want to reinforce this message overtime by using green labels on all of your products. You don’t have to be blatant with your messaging at this stage. Simply provide a small, daily reminder on your products and invoices.

Finally, it is a good idea to participate in green business seminars and other events. If your community has a local Green Chamber of Commerce, you should consider joining as well.

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Energy

Responsible Energy Investments Could Solve Retirement Funding Crisis

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Energy Investments
Shutterstock / By Sergey Nivens | https://www.shutterstock.com/g/nivens

Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.

Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?

Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.

Tip #1: Focus & Determination

Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.

Tip #2: Minimize Spending

One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!

Tip #3: Visualize Your Goal

You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.

Investing in Clean Energy

One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.

With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.

The Future of Green Biz

As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.

Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.

In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!

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