The UKSIF team are rather busy this week, co-ordinating the second National Ethical Investment Week to spread the word about green and ethical investing to consumers, financial advisers and charities.
Our research has found that half of Britons with savings and investments would like to make money and make a difference. We are flagging up that today’s green and ethical investments are a great way to do this – particularly in the run-up to the Copenhagen summit.
For example, we are offering financial advisers “Summit to think about” at Money Marketing Online.
But, as a result, we won’t be posting any more to this blog until the week is over.
Have a happy National Ethical Investment Week 2009.
Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts
Tuesday, November 10, 2009
Global Centre Report: A Missed Opportunity for Green Leadership?
Yesterday saw the launch of “Asset management: the UK as a global centre”, a report produced under the joint chairmanship of the Chancellor of the Exchequer and the Chair of the UK’s Investment Management Association.
There is a major missed opportunity in the report. This can be summed up in three words - “carbon”, “climate” and “green”. I searched the PDF for all of them. Each returned “No matches were found”.
So, within a month of the Copenhagen Summit, this significant report on future UK leadership in asset management doesn’t even mention the challenge of redirecting capital towards low carbon industrial and social transformation.
Welcoming the report, Financial Services Secretary Paul Myners said he looked forward to “… the prospect of on-going engagement with the industry on .. the role of markets in society and ethical and moral dimensions to investment”. Lets hope he addresses this!
There is a major missed opportunity in the report. This can be summed up in three words - “carbon”, “climate” and “green”. I searched the PDF for all of them. Each returned “No matches were found”.
So, within a month of the Copenhagen Summit, this significant report on future UK leadership in asset management doesn’t even mention the challenge of redirecting capital towards low carbon industrial and social transformation.
Welcoming the report, Financial Services Secretary Paul Myners said he looked forward to “… the prospect of on-going engagement with the industry on .. the role of markets in society and ethical and moral dimensions to investment”. Lets hope he addresses this!
Thursday, July 16, 2009
From Crisis to Recovery: Reshaping Capital Markets
I have contributed a chapter on sustainable capital markets to a new Green Alliance pamphlet “From crisis to recovery: New economic policies for a low carbon future".
In it, I describe our policy recommendations to tackle the underlying issues that drive today’s dysfunctional investment approaches. We think this needs not just better regulation but also improvements to leadership, cultural norms and external scrutiny.
Specific proposals include:
In it, I describe our policy recommendations to tackle the underlying issues that drive today’s dysfunctional investment approaches. We think this needs not just better regulation but also improvements to leadership, cultural norms and external scrutiny.
Specific proposals include:
- Pension funds and other major investment owners should be required to report on how they implement their sustainable investment policies
- Publicly owned investment holders should be required to be responsible owners and report annually on their progress
- Greater transparency should be demanded of both companies and institutional investors
- The objectives of financial regulators should enable them to take greater account of the wider public interest, including sustainable development.
It would be great to have your comments on these suggestions and the rest of the chapter.
"Investing in a Sustainable Recovery" Initiative
Details about the “Investing in a Sustainable Recovery” initiative are now available on the UKSIF web site.
There is a short description and notes from its first two roundtables. The third roundtable in May focused on “green bonds” and discussed a paper on “climate bonds” by Sean Kidney and colleagues.
The Initiative is convened by Tomorrow’s Company, UKSIF and the HSBC Climate Change Centre of Excellence, and supported by The London Accord and Network for Sustainable Financial Markets. Participation is by invitation only to institutional investors in fixed income and other asset classes, and relevant policy influencers.
There is a short description and notes from its first two roundtables. The third roundtable in May focused on “green bonds” and discussed a paper on “climate bonds” by Sean Kidney and colleagues.
The Initiative is convened by Tomorrow’s Company, UKSIF and the HSBC Climate Change Centre of Excellence, and supported by The London Accord and Network for Sustainable Financial Markets. Participation is by invitation only to institutional investors in fixed income and other asset classes, and relevant policy influencers.
Wednesday, April 22, 2009
A historic but limited contribution
Today’s UK Budget Day was a historic occasion as the Chancellor announced the first ever carbon budget figures. It was even held on Earth Day. And it is good news that the HM Treasury budget web site includes a section on “building a low carbon recovery”.
Green Alliance was cautiously optimistic, calling it “Only a small step for mankind, but a big leap for HM Treasury” but the BBC asked “Green tinge or blue rinse?”.
BWEA seemed happiest, particularly due to the announcement of a deal offering up to £4 billion of European Investment Bank funding for renewables. The Renewable Energy Association offered a more restrained welcome highlighting that the proportion of stimulus funding allocated to green investment remained below the 20% recommended by Lord Stern on the information available.
The general reaction? Still a long way to go. And personally, however hard I try, I still feel under-whelmed by the announcements compared with the scale of the challenge.
Green Alliance was cautiously optimistic, calling it “Only a small step for mankind, but a big leap for HM Treasury” but the BBC asked “Green tinge or blue rinse?”.
BWEA seemed happiest, particularly due to the announcement of a deal offering up to £4 billion of European Investment Bank funding for renewables. The Renewable Energy Association offered a more restrained welcome highlighting that the proportion of stimulus funding allocated to green investment remained below the 20% recommended by Lord Stern on the information available.
The general reaction? Still a long way to go. And personally, however hard I try, I still feel under-whelmed by the announcements compared with the scale of the challenge.
Tuesday, March 24, 2009
The importance of asking the right questions
"It is not the answer that enlightens, but the question” - Eugen Ionesco
“A prudent question is one half of wisdom” – Francis Bacon
As we seek to build a more sustainable financial system, we need to think about whether, collectively, we are asking the right questions. Questions indicate where our priorities lie and can shape norms and behaviours. Questions focus our minds and can get us to the right answers and the right results. The consequence of us not asking the right questions therefore is potentially to turn our focus away from what we actually want to achieve.
In the debate on ownership, can we identify a failure of pension funds at times to ask the right questions of their consultants and fund managers? Has this led to a situation where the consultants and managers assume they know what their clients want and the clients assume that the managers know what they truly want?
“A prudent question is one half of wisdom” – Francis Bacon
As we seek to build a more sustainable financial system, we need to think about whether, collectively, we are asking the right questions. Questions indicate where our priorities lie and can shape norms and behaviours. Questions focus our minds and can get us to the right answers and the right results. The consequence of us not asking the right questions therefore is potentially to turn our focus away from what we actually want to achieve.
In the debate on ownership, can we identify a failure of pension funds at times to ask the right questions of their consultants and fund managers? Has this led to a situation where the consultants and managers assume they know what their clients want and the clients assume that the managers know what they truly want?
Similarly has not asking the right questions blunted the ability of financial advisers and private client managers to fully understand their clients’ needs and interests?
The importance of the right question was highlighted to me by two separate conversations I had with charity trustees last week. On Thursday, I participated in a roundtable on charities and the recession. During the discussion, a leading charity trustee pointed to his ability to ask difficult questions as one of his key contributions to the stewardship of the charities he is involved with.
I then met on Friday with the chair of a leading UK charitable foundation. We were discussing how trustees oversee their investment managers. The key was having the right mix of trustees; both those with experience of the investment industry and ‘novices’, he said. He explained that the ‘novices’ are key because they are not afraid to ask the ‘naïve and daft’ questions.
…. which turns my mind back to where last week began…
On Monday, UKSIF held a seminar with Bob Doppelt, the author of ‘The Power of Sustainable Thinking’. He argues that to create a positive and sustainable future you need to start by transforming your own thinking before you can motivate organisations to change. Central to this is to change the frames through which you see the world. He identifies five key elements and asks us to consider:
what is the problem? what are the stakes? what are the solutions? why now? why me?
Talk about asking the right questions…..
Friday, March 20, 2009
Investors as Owners need to tame the “Perfect Storm”
The role of investors as owners of failing financial institutions moved centre stage at the 2009 NAPF Investment Conference last week.
In his speech, FSA Chief Executive Hector Sants issued a very welcome call on investors to shift the balance of their interests towards their ownership responsibilities. He said “It is critical to recognise that the principal responsibility for managing firms responsibly remains with the management of the firms and that shareholders are the principal mechanism for holding these managers accountable. Shareholders going forward, have a duty, an obligation to make that oversight role more effective.” And he questioned “if there had been more effective and collective shareholder intervention whether the financial crisis we are witnessing would have been as severe”.
Sants said “As owners we would encourage you to focus on four issues: governance, risk management, business strategy and the issue of compensation.”
A key issue is how investors interpret issues of risk and strategy.
Yesterday, the UK Government Chief Scientist Professor John Beddington gave an insight on this. He said the looming crisis of food, energy and water shortages by 2030 would match the current one in the banking sector and result in a “perfect storm”, according to the BBC.
2030 is only 21 years away – as far forward as 1988 is back. Today’s 45 year olds may not even be drawing the pension that they are investing for today while Sir Fred Goodwin will be a mere 71 year old, presumably with many years of pension still before him.
For genuinely sustainable and long-term investment, investors oversight of risk management and business strategy needs to think this far ahead and beyond – and to protect the wealth generating capacity of the global economy as a whole not just of the individual firm.
The Walker Review of the role of institutional shareholders in corporate governance needs to step up to the challenge of encouraging this level of farsightedness.
In his speech, FSA Chief Executive Hector Sants issued a very welcome call on investors to shift the balance of their interests towards their ownership responsibilities. He said “It is critical to recognise that the principal responsibility for managing firms responsibly remains with the management of the firms and that shareholders are the principal mechanism for holding these managers accountable. Shareholders going forward, have a duty, an obligation to make that oversight role more effective.” And he questioned “if there had been more effective and collective shareholder intervention whether the financial crisis we are witnessing would have been as severe”.
Sants said “As owners we would encourage you to focus on four issues: governance, risk management, business strategy and the issue of compensation.”
A key issue is how investors interpret issues of risk and strategy.
Yesterday, the UK Government Chief Scientist Professor John Beddington gave an insight on this. He said the looming crisis of food, energy and water shortages by 2030 would match the current one in the banking sector and result in a “perfect storm”, according to the BBC.
2030 is only 21 years away – as far forward as 1988 is back. Today’s 45 year olds may not even be drawing the pension that they are investing for today while Sir Fred Goodwin will be a mere 71 year old, presumably with many years of pension still before him.
For genuinely sustainable and long-term investment, investors oversight of risk management and business strategy needs to think this far ahead and beyond – and to protect the wealth generating capacity of the global economy as a whole not just of the individual firm.
The Walker Review of the role of institutional shareholders in corporate governance needs to step up to the challenge of encouraging this level of farsightedness.
Thursday, March 19, 2009
Green Bonds for a Green Stimulus?
Investor interest in green stimulus packages is growing. Earlier this week, a group of investors, supported by UKSIF and Tomorrow’s Company met for the second in a series of roundtables to explore how economic stimulus packages could be encouraged to accelerate the transition to a low carbon, resource efficient economy.
Stimulus packages need to leverage private investment into the new green economy, they said. And there is an emerging consensus that well designed “green bonds” are an important part of this. Because this investment is urgent, these bonds need financial characteristics already well understood by investors. They need to look attractive as conventional fixed income investments not as something new and different that can justify only a cautious toe in the water for the next few years.
Luckily, there is already a good example to follow in the work of the International Finance Facility for Immunisation which works with the GAVI Alliance and the World Bank. The IFFIm has created and placed institutional bonds backed by government commitments to bring forward funds for vaccination.
And, separately, the UK government has already welcomed the HSBC Vaccine Investment ISA that allows UK retail investors to join institutional investors in investing in vaccine protection at a competitive rate of return. It is open until 24 April 2009.
The challenge now is to build rapidly on this experience – developing products for pension funds, insurance companies and other institutional investors initially and perhaps also for retail investors later.
Stimulus packages need to leverage private investment into the new green economy, they said. And there is an emerging consensus that well designed “green bonds” are an important part of this. Because this investment is urgent, these bonds need financial characteristics already well understood by investors. They need to look attractive as conventional fixed income investments not as something new and different that can justify only a cautious toe in the water for the next few years.
Luckily, there is already a good example to follow in the work of the International Finance Facility for Immunisation which works with the GAVI Alliance and the World Bank. The IFFIm has created and placed institutional bonds backed by government commitments to bring forward funds for vaccination.
And, separately, the UK government has already welcomed the HSBC Vaccine Investment ISA that allows UK retail investors to join institutional investors in investing in vaccine protection at a competitive rate of return. It is open until 24 April 2009.
The challenge now is to build rapidly on this experience – developing products for pension funds, insurance companies and other institutional investors initially and perhaps also for retail investors later.
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