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Winners and Spinners Report 2015 reveals best-in-class ethical funds but uncovers evidence of ‘greenwash’

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Winners and Spinners Report 2015 reveals best in class ethical funds but disappointingly also uncovers evidence of ‘greenwash’ in this year’s review of the ethical investment market. Castlefield, the UK’s leading specialists in responsible investment, today announces its ‘Winners and Spinners’ review for 2015, an annual analysis of UK-based ethical and environmental funds worth £15 billion (Source: EIRIS), designed to help investors who want to ensure their savings make a positive impact.

Castlefield identifies five “winners” – organisations which demonstrate transparency whilst making a significant contribution towards the growth of the responsible investment market.

It also names five “spinners” – lightweight ethical and environmental funds with millions invested in companies whose activities contribute to social and environmental problems, and are doing little to support confidence in or growth of the ethical investment market.

The ranking criteria for the funds are based on publicly available data and cover research quality, clarity and transparency of purpose, long-term commitment to the stated aims and fund performance.

‘Winners’ for 2015

Organisations demonstrating transparency whilst investing positively in companies providing social and environmental solutions and contributing to growing the ethical investment marketplace.

  1. WHEB Sustainability Fund

Good performance plus recognition of its transparency and engagement with investors.

  1. Alliance Trust Investments

Selected for its strong performance and for providing quality transparent information to investors.

  1. Premier ConBrio B.E.S.T. Income Fund

Offers a unique combination of a high level of income with no exposure to fossil fuels

  1. Quilter Cheviot Climate Assets Fund

Strong focus on sectors which will benefit from low-carbon future

  1. Impax Environmental Markets Investment Trust

First UK listed equity fund to demonstrate a net positive carbon impact

John Eckersley, Founder and Managing Partner of Castlefield explains: “Our ‘Winners and Spinners’ report, now in its fifth year, focuses attention on businesses and products which are making a major contribution to ensuring that the world continues its progress towards becoming a more responsible and sustainable place.

‘Spinners’ for 2015

Potentially misleading negatively screened funds with some investments in companies contributing to environmental and social problems.

  1. Aberdeen Ethical World Fund

(£6.9M invested in major shale oil extractor EOG resources and poor financial performance).

  1. Legal & General Ethical -Trust

(Light ethical negative screens; no involvement with the companies in which it invests).

  1. Prudential Socially Responsible Fund

(Top ten holdings include Shell and mining company Rio Tinto plus the fund has delivered a lack lustre performance).

  1. Sovereign Ethical Fund

(Negative only screens with approx. 7% held in oil and gas whilst the financial performance of the fund has been poor)

  1. Virgin Climate Change Fund

(Shell features amongst top 10 holdings making up over 4% of the fund.   There is also lack of information for investors, whilst promoting the idea that green funds underperform.)

John Ditchfield, Partner, comments: “Our review found that many ethical funds have not moved beyond ‘negative screening’- this is an avoidance based approach which is rather outdated.”

Olivia Bowen, Partner, adds: “Some of these funds are giving ethical and sustainable investing a bad name.  We are sending a message to the public to invest just 10% of their assets in a responsible manner ~ this alone would see the market grow enormously.”

Innovation and Trends

Castlefield Advisory Partners also wanted to recognize the innovative and growing platform for social and ethical investments and to highlight the increasing shift away from investment in fossil fuel :

Social Stock Exchange

The world’s first regulated exchange dedicated to businesses and investors seeking to achieve a positive social and environmental impact. http://socialstockexchange.com/

Ethex

A not-for-profit organisation which offers consumers a simple way to invest in high social impact and environmental businesses.  https://www.ethex.org.uk/

The move to divest from fossil fuels is gaining momentum

One of the continuing trends in the sustainable, responsible and ethical marketplace is the move to divest from fossil fuels and actively invest in the low-carbon economy.  Since our report last year, the Divestment campaign has gathered apace.   Pope Francis criticised Climate Change deniers and in June 2015 called for “changes in lifestyles and energy consumption to avert the ‘unprecedented destruction of the ecosystem’ before the end of this century.” (Source: The Guardian 16th June 2015).

More recently it has been reported that Leonardo DiCaprio and over 2,000 individuals and 400 institutions with combined investments worth $2.6 trillion are now committed to pulling their money from fossil fuel companies to tackle climate change. (Source: The Guardian September 2015).

The Carbon Tracker Initiative has warned that investors in fossil fuel companies could lose out because they already have more reserves of coal, oil and gas than can be burned if world is to avoid dangerous global warming ~ this concept is called Stranded Assets. It says oil companies like Exxon Mobil are pursuing expensive, uneconomic projects to develop new reserves which risk wasting $1.1 trillion of investors’ money. [1]

John Ditchfield said: “Funds which positively invest in sustainable companies should have a place in every investor’s portfolio, whether or not they consider themselves ethical. There is a clear link between sustainability and business success and these funds are well-placed to spot emerging opportunities in the green economy.”

Further detail on each of the Winners and Spinners Report and Fund Analysis

A copy of the Castlefield ‘Winners and Spinners’ report for 2015 is attached – this provides details of performance figures for the funds highlighted at both ends of the green spectrum together with comprehensive reasons why each has been selected. It includes specific examples of questionable ethical holdings for the ‘spinner’ funds.

Consumer Survey Results

  • 56% of investors were concerned that they could lose money by investing in companies that damage the environment, like oil and gas.
  • Investors are beginning to recognise that sustainable funds with long term vision are likely to do well – more than half (51%) of investors thought that companies which are trying to make a positive contribution to society and the environment are more likely to succeed and their savings/ investments are likely to perform better over the long term.
  • 54% of investors would move their money if they knew it was supporting companies causing social and environmental problems.
  • Nearly half (45%) were not aware that that there are ethical and sustainable investment options.
  • Six out of ten people say that they would like to be offered a sustainable and ethical option when choosing an investment.
  • But 60% said that they would not know where to go for advice about sustainable and ethical funds.
  • Good investments versus bad investments – consumers highlight the top five ethical issues they wish to support and the top five industries they wish to avoid.
  • 74% claim they would be shocked if a fund claiming to be ‘ethical’ turned out to be investing in companies that negatively impact people and the environment.

[1] Oil Industry Risks $1.1 Trillion of Investor Cash, Bloomberg, 8-5-14 http://www.bloomberg.com/news/2014-05-07/oil-industry-risks-1-1-trillion-of-investor-cash-study.html

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What Sustainable Real Estate Investors Look For In Properties They Buy

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sustainable real-estate investors
Shutterstock Licensed Photo - By Monster Ztudio | https://www.shutterstock.com/g/chaiyawat%20sripimonwan

Investors choose the homes they buy, sell, or flip based on a variety of factors. The most crucial factor is the potential for profit, but there are additional factors that contribute equal weight to the final decision. One of those factors has to do with sustainability.

An article from Green Residential discusses several green construction methods, citing the fact that 56% of CO2 emissions in the US come from new building construction. Noting that 39% of CO2 emissions come from existing buildings, the article makes a good point, “This is the highest volume of emissions for any sector, and could be drastically reduced if builders and occupants updated their properties and had better practices.”

The updates and “better practices” center on sustainable construction. Even though a building has already been constructed, it’s never too late to incorporate aspects of sustainability. This applies to individual construction, as well as sustainable communities.

Sustainability is about more than materials

A sustainable building can be constructed with eco-friendly materials sourced locally. This eliminates the need to transport materials over long distances using excessive amounts of gasoline and other fuels. Sustainability is also about retaining the efficiency of the building’s heating and cooling systems.

Sustainable construction methods cost more upfront, but save money over time.

Renters – commercial and private – want energy efficiency

If an investor can own multiple energy efficient buildings, whether commercial or residential, they’ll have an easier time generating a stream of income from those sources.

People want to save money on their energy bills, especially when they have a large space to keep warm. It makes no difference if they use electric, propane, solar, or geothermal energy to heat their home – if the building isn’t built to be efficient, both cold and hot air will escape. This means they’ll have to run their heater or air conditioner continuously, which creates more wear and tear.

Sometimes the issue with an inefficient building isn’t money, but the wasted energy itself. Being off the grid doesn’t cost more money to heat and cool your space. However, no matter what energy source you use, it’s difficult to keep a drafty home warm.

If you’re using solar panels or a geothermal coil buried in your backyard, you still need to generate the energy to power your home. That energy can take time to generate. If your building is drafty, you can end up overtaxing your energy system trying to keep it warm. If you use appliances that hog energy, it doesn’t matter what type of energy you use, it’s going to be wasted.

What investors look for in a sustainable building

Investors interested in sustainable buildings look for the following prior to buying:

  • Location of the building. A building with windows facing opposite that of the rising and setting sun is ideal. The sun sets west and rises in the east, so a building that faces north to south will generally be less exposed to the sun. In the summer, this will prevent the need to run the air conditioning constantly, which saves on energy and, of course, money.
  • Energy efficient appliances. The appliances that are already installed in a residential building may not be a deal breaker, but they’re a big influence. It’s not always a big deal for an investor to switch out appliances, but it is an expense.
  • Insulation. Proper insulation can’t be stressed enough as one of the most important factors that contribute to a sustainable investor’s decision to buy a property. The purpose of insulation (in the walls) is to trap both hot and cold air to maintain the temperature inside the building.Ideally, inside of an energy efficient building you can run the heater or air conditioner for a period of time, and expect the temperature to remain the same for a while. It’s normal for the temperature to gradually change, but in a poorly insulated home, it will get cold or hot rapidly.
  • Insulated and sturdy window construction. Windows are not cheap to replace and can cost up to $1,000 each. Custom windows – those with unique shapes and sizes that aren’t standard – are especially expensive.

An investor wants windows that are sturdy enough to provide security in the event of a break-in, because that’s a great selling point to renters (or buyers if they’re flipping). However, more importantly, windows open a building up to enormous drafts. It’s the drafts from poorly insulated windows that often cause exorbitant heating and cooling costs.

To make a building energy-efficient and therefore sustainable, an investor might be willing to make certain improvements to the construction of the home, if they can recover their costs over time. However, efficient elements are best when implemented from the beginning, as more people are starting to realize. It’s the consumer demand for sustainability that’s driving greener construction methods, and soon, we can expect sustainable construction to be in the majority.

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Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

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

paper waste

Shutterstock Licensed Photo – By Yury Zap

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.

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