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A Q&A with Simon Howard, Chief Executive of UKSIF

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Simon Howard

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.

Company Profile

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

Features

Green Weddings Trend: Why 70% of Newlyweds Are Going Green

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A couple of months ago, my best friend got married to her new husband. They are both very eco-conscious people, so they decided to have a unique twist on their wedding. They asked for the following:

  • They arranged a carpool with their friends.
  • They didn’t have any balloons. Instead they used umbrellas.
  • They used plant materials instead of plastic confetti.
  • My friend insisted her husband not purchase a diamond. In addition to being ecologically conscious, she didn’t like the idea of having a stone that was used in conflict zones.

My friends aren’t the only ones making these changes. In fact, nearly a quarter of all newlyweds are organizing green weddings.

Green Weddings Are Becoming the Norm

People are more concerned about green living than ever before. They are trying to incorporate environmental protectionist ideas into every facet of their lives, even the most intimate, such as marriage. A growing number of people are trying to have green weddings, which can make a big difference in reducing their carbon footprint.

How much of a difference can this make? Here are some statistics to bear in mind:

There are a number ofreasons that green weddings are becoming more important. Here are a few.

People Are More Worried About Environmental Preservation than Ever Before

Green living in general is becoming a greater concern for most people. Even younger conservatives are breaking from their older counterparts by insisting on fighting climate change. According to a poll from Pew Research earlier this year, 75% of Americans say that they are very concerned about protecting the environment. Having green weddings is a good way to act on this concern.

One of the biggest changes people are making is using recycled products for their green weddings. This is explained by the research from Pew:

“Overall, 32% of U.S. adults say they are bothered a lot by people throwing away things that could be recycled. Roughly six-in-ten Americans (61%) who say they always try to live in ways that protect the environment say it bothers them “a lot” when others throw away things that could be recycled. Among those who are less focused on environmental protection, only a quarter say it bothers them a lot when others don’t recycle. People who are environmentally conscious are also twice as likely as others to say that seeing someone incorrectly putting trash in recycling bins bothers them a lot (42% vs. 21%).”

Indifferent Politicians Are Driving them to Take More Initiative

Many politicians in power have been very hesitant to take action on climate change. Many of them have openly stated that it is a hoax. These politicians are forcing people to do what they can in their own lives to make a difference. Making small changes, such as hosting green weddings, is a great way to improve the environment without waiting for political momentum.

Cost and Simplicity

A couple of the biggest reasons that people want to host green weddings have nothing to do with their concern for the environment. Running green weddings is simply cheaper and simpler than having a massive, traditional one. One of the biggest changes is that they are buying green engagement rings from the best brands.

Green Weddings Are the Future

Green weddings have become very popular over the past few years. They will probably account for close to 90% of all marriages by 2025. People that are planning to get married should look into the benefits and plan accordingly.

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Features

Green Tech Start-Ups: Are they the Future?

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Endless innovations are occurring in green companies, reinventing the industries they belong to. Gradually, they are beginning to amass more success and popularity. Consequently, these factors serve as a good indicator for green technology businesses, and their development must begin somewhere.

Green tech start-ups boast a wide array of opportunities for the economy and environment, while boosting recruitment openings with valuable services. While the technology industry is littered with high revenues and competition, the green tech start-ups are the clear sign of a cleaner future.

Fulfilling a Genuine Need

Many tech companies will market themselves as the ultimate tech giants to shift stock and make profit. As they all vie for attention through warped corporate rhetoric, there is only one ethical winner; the start-up green tech company.

Some argue that mainstream tech businesses have grown far too big, branching out into other industries and standing between the consumer and practically everything they do. However, green tech start-ups go beyond the shallow ambitions of a company, answering a call to sincerely help the customer and climate in any way they can. Of course, this is an attractive business model, putting customers at ease as they contribute to a humanitarian cause that is genuine through and through.

After all, empathy is a striking trait to have in business, and green tech start-ups maintain this composure by their very nature and purpose.

Creating Opportunities

Despite the pursuits for clean energy still needing more awareness, green tech is an area that is ripe for contribution and expansion. There’s no need to copy another company or be a business of cheap knockoffs; green tech start-ups can add a new voice to the economy by being fresh, fearless and entrepreneurial.

Technology is at its most useful when it breaks new ground, an awe that eco-friendly innovations have by default in their operations. Of course, green tech start-ups have the chance to build on this foundation and create harmony instead of climate crisis. Ultimately, the tech advancements are what revolutionise clean energy as more than an activist niche, putting theory into practice.

Despite the US gradually becoming more disengaged with green technology, others such as China and Canada recognise the potential in green technology for creating jobs and growth in their respective economies. The slack of others spurs them on, which creates a constant influx of prospects for the green tech sector. Put simply, their services are always required, able to thrive from country to country.

A Fundamental Foresight

Mainstream technology can seem repetitive and dull, tinkering with what has come before rather than turning tech on its head. Since 2011, technology has been accused of stagnation, something which the internet and petty app services seem to disguise in short reaching ideas of creativity.

However, green tech start-ups aren’t just winging it, and operate with a roadmap of climate change in the years ahead to strategize accordingly. In other words, they aren’t simply looking to make a quick profit by sticking to a trend, but have the long-term future in mind. Consequently, the green tech start-up will be there from the very start, building up from the foundational level to only grow as more and more people inevitably go green.

They can additionally forecast their finances too, with the ability to access online platforms despite the differing levels of experience, keeping them in the loop. Consequently, with an eye for the future, green tech startups are the ones who will eventually usher in the new era.

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