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Investors warned of ‘stranded’ carbon assets and working condition risks

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Investors need to consider the sustainability of the companies they invest in to ensure they are not exposed to future risks that could negatively affect financial performance, Standard Life Investments has warned.

The firm’s Global Outlook Q1 2014 report argues that companies need to take environmental, social and governance (ESG) issues into consideration in order to secure sustainable growth. Investors also need to investigate where their money is going to protect themselves from risks in the future.

Integrating ESG matters into investment strategies is increasingly popular and productive, for both businesses and investors, the report found. A particular focus has been placed on providing a deeper understanding of a company, its risks and opportunities.

Since 2006, when the United Nations launched the Principles for Responsible Investment (PRI) to help institutional investors incorporate ESG matters into their policies, the number of signatories has grown each year. In 2013, around 1,100 investors, with combined assets of around $32 trillion (£19 trillion) had signed up to the principles.

The growing trend of taking non-financial issues into consideration is also reflected in sustainability reports. In 2005, 64% of the world’s 250 largest companies reported their sustainability activities by 2011 this figure had reached 94%.

Amanda Young, head of responsible investing at Standard Life, wrote, “Clearly, companies can no longer operate in isolation. The way firms conduct their business affects both the environment and society.

“The environmental and social externalities that companies need to consider as part of their business strategies evolve and change constantly and can pose significant financial risks for organisations.”

She added that the current issues include the risk of stranded assets for extractive industries, which will particularly affect big coal miners; the implications on productivity of poor human capital management, which may affect large employers; and the working conditions in countries like Bangladesh.

The issue of working conditions aboard will impact on businesses that have international supply chains. Poor working conditions were bought to the public’s attention in April last year, when a factory collapsed in Bangladesh. The avoidable disaster raised questions about safety and working conditions and the role consumers and investors in western societies play.

These are issues that investors need to consider as they can impact on returns, particularly as government regulation around sustainability and ethics increases. Young uses that example of the US Foreign Corrupt Practices Act, which prohibits companies from bribing foreign officials in any part of global business operations, to demonstrate this.

The Act applies to any company that files under the US Securities and Exchange Commission. This means it can affect non-US companies and French oil firm Total paid $398m (£241m) to resolve allegations impacting on its shareholders.

Further reading:

Environment secretary: ‘growth and sustainable practices can go hand in hand’

Majority of Britons unaware of ‘carbon bubble’ investment risks

The ‘do-gooder ethical investment crowd’ have plenty of sectors to invest in

Ban Ki-moon: green investors have the ‘power and responsibility’ to transform economy

Motley Fool: responsible investment is about ‘doing good by doing right’

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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