Responsible Investment IFA of the year

Gaeia were delighted recently to be awarded runner up in the Responsible Investment IFA of the year awards, arranged by Unbiased.

The eighth annual Unbiased.co.uk Media Awards seek to recognise the valuable contributions of advisers to the public image of independent financial advice and professional advice in general.  This award recognises Gaeia’s knowledge, commitment and longstanding web presence, with its regularly updated news items, being of particular interest  to ethically inclined investors.

As well as providing a service to our industry, Unbiased provide a valuable service to members of the public, helping them find their way through the complexities of seeking advice and finding a professional service.

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Tree Appreciation

I left Manchester at 7am on a misty March morning, to drive to south east Wales in order to learn more about trees. Having grown up in the country, and now a Mother, I am increasingly keen to reconnect with lessons from my own childhood.
My parents taught me many plant species in my youth (even stretching to the Latin) and I have been frustrated that I have forgotten so much during my lengthy urban sojourn.
I now have a more suburban lifestyle, and during walks in our local woods was disappointed to be barely able to recognise even oak and beech.

So, browsing the Internet one night, I came across a tree identification course, held in Monmouthshire, by Kate Humble and her husband Ludo Graham via their Humble by Nature enterprise www.katehumble.com (new dedicated website launching soon www.humblebynature.com) They have part-bought a tenanted farm in the Wye Valley and organise courses here in Rural Skills and Keeping Livestock. I was happy to re- visit Wales, as many childhood holidays were spent here.

Kate and Ludo were very welcoming and spent the day learning alongside us, and their enjoyment of the countywide and passion for sustainable living were clear to see.

They were interested to hear about the Campaign for Real Farming, as we share common goals – such as support for sustainable small-scale farming, and gaining community involvement in local farms.
With the farmer Tim, we discussed the need to encourage young people back to farming as a career, and the importance of diversification – such as running these sorts of courses- to help small farms survive.

So, what did I learn about trees? We were taught by Phil Webb, Proprietor of Fieldwork- Forestry & Woodland Services. As my Mother pointed out to me, most trees were yet to be in leaf, so this made it all the more challenging, that we learnt how to identify trees from their bark and buds alone. Phil supervised our tree planting efforts at the end of the day, and the attached picture is of a little oak tree. Between us we planted 150 trees in 1.5 hours. Greatly satisfying.

Here are my identification pointers (for dummies!):
Hazel:catkins (yellow pollen) tiny red flowers like sea anemones.
Ash: black buds, green bark. Branches sweep up at tip, ie L shaped, on more mature trees.
Alder &rowan : purple buds (Rowan: fluffy buds)
Elder: White flowers. Shrub.
Blackthorn: long spikes. Hawthorn: short spikes, flowers earlier than blackthorn.
Maple: looks like elder to me! Very lined bark.
Aspen: ridged scars, pale bark, pointy brown buds.
Horse chestnut: sticky buds
Birch: gritty bark like shark skin, which is brown with white flecks.

I should also mention that the lunch was fantastic (and I am not easily impressed when it comes to food!) Overall, greatly enjoyable.

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7 Dec 2011 : Meet our Castlefield colleagues

As part of the merger we are moving to Castlefield’s offices in central Manchester on 8th December. Our telephone will have a recorded message giving the new telephone number.

This event will will be the last to take place at our old offices in Didsbury.

1 The Arcade
829 Wilmslow Road
Manchester M20 5WD

Pre-Christmas gathering for clients to meet our new co-directors from Castlefield and hear about the commitment to socially responsible/ employee ownership.

 We hope to organise further events in the New Year, including in the London area.

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Positive changes at GAEIA

We are delighted to tell you that GAEIA has recently merged with Castlefield, a Manchester-based investment and financial services business owned by a mix of a charitable foundation and employees/benefits trust. The ownership structure is designed for the benefit of current and future generations of clients and employees. The GAEIA name remains and we will continue to provide the same services as Independent Financial Advisors.

We will be able to spread the word about environmental and ethical investment more effectively and to more individuals, businesses and charities as a result of the merger

Brigid, Olivia and Helen will remain Directors and shareholders in the new enlarged company, along side our new senior colleagues, David Soutar and John Eckersley (the new MD) from Castlefield, who are committed to both employee ownership and the growth of ethically/environmentally responsible investment.
 

Frequently Asked Questions can be found o­n the Castlefield Website
Password: sustainability.

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FTSE4Good ESG Index

A decade after the launch of the ground-breaking FTSE4Good Index Series, FTSE Group, the award winning index provider, recently announced the launch of the FTSE4Good ESG Ratings. This new data service provides a comprehensive, transparent and objective system to measure the Environmental, Social and Governance (ESG) practices of over 2,300 public companies worldwide.

There is an increasing awareness that ESG factors are an important component in understanding corporate risks and performance and in the achievement of long-term, sustainable investment returns. In the decade ahead the integration of ESG factors into investment analysis, decision-making and stewardship is expected to increase.  Globally, 227 asset owners and 496 asset managers have signed up to the United Nations Principles for Responsible Investment (PRI), thereby committing to integrating ESG considerations into their investment and stewardship approaches.

The FTSE4Good ESG Ratings provide institutional investors with a flexible and granular scoring model which will enable them to understand a company’s ESG practices in multiple dimensions;

·         Overall ESG rating

·         Scores against a broad Environmental, Social and Governance pillar

·         Measurement against six ESG criteria themes including; environmental management, climate change, human and labour rights, supply chain labour standards, corporate governance and countering bribery.

The ratings are risk-relative and indicate a company’s success at managing its company-specific ESG risks. This means companies with higher ESG risks have more to achieve in order to obtain a high score.

The new FTSE4Good ESG Ratings provide a flexible tool for active portfolio management, manager selection, company engagement, risk management, company research and corporate ESG benchmarking. Active portfolio managers can use the ratings to define an eligible investment universe or apply the ratings to a propriety investment model.

Institutional investors can use the ratings to help them assess their portfolios against ESG themes and their exposure to ESG risks. As more fund managers and asset owners choose to engage with companies as part of their stewardship responsibilities, the ratings can provide them with an independent and objective measure to identify companies with whom they might engage and to track their progress.

The FTSE4Good ESG Ratings criteria are publicly available and follow clearly defined methodology and rules. To ensure their quality and accuracy they are overseen by an independent committee made up of experts from the investment community, academia, the business community, unions and NGOs. Company ratings are re-assessed twice a year by leading research provider, EIRIS.

 “With the launch of the FTSE4Good ESG Ratings we are building on 10 years of FTSE4Good index experience”

said Mark Makepeace, Chief Executive of FTSE Group.

“The new Ratings service provides an easy to use and objective measure of corporate ESG practice and risk.  Today we are also highlighting those companies that, based on our Ratings, have leading ESG practices.”

The Rt Hon Vince Cable, Secretary of State, who was a keynote speaker at the event in London to celebrate 10 years of FTSE4Good, said that

“It is crucial for investors to encourage and support long-term thinking in the companies in which they invest. To facilitate this there is a great need for a focus on broader corporate performance, rather than a narrow focus on near term financials. Environmental, social and governance considerations are an important part of this.”

Joanne Segars, Chief Executive of the NAPF, also spoke at the FTSE event tonight welcomed the launch of the FTSE4Good ESG Ratings

“Pension funds naturally have a long-term focus.  With the introduction of the Stewardship Code this is highly topical as there is a real need for good data such as this, to use in engagement and dialogue with investee companies.”

Highest scoring companies

 in accordance with FTSE4Good ESG Ratings – Global

Region Constituent name Country Supersector Overall Rating
(Absolute)
Global Aviva UK Insurance 5
Global Bank Hapoalim ISR Banks 5
Global Vivendi FRA Media 5
Global Westpac Banking Corp AU Banks 5
Global ABB SWIT Industrial Goods & Services 4.9
Global BT Group UK Telecommunications 4.8
Global Capita Group UK Industrial Goods & Services 4.8
Global Diageo UK Food & Beverage 4.8
Global Insurance Australia Group AU Insurance 4.8
Global Koninklijke Philips Electronic NETH Personal & Household Goods 4.8
Global Nokia FIN Technology 4.8
Global Norsk Hydro NOR Basic Resource 4.8
Global RSA Insurance Group UK Insurance 4.8

 

Countries with highest scoring averages

 in accordance with FTSE4Good ESG Ratings

Country Average Overall ESG Rating
Norway 3.73
Netherlands 3.59
Sweden 3.57
Finland 3.31
New Zealand 3.29
France 3.29
Spain 3.24
UK 3.18
Italy 3.17
Switzerland 3.11
Greece 3.06
Denmark 3.01
Belgium 2.98
Germany 2.98
Australia 2.93
Portugal 2.86
Canada 2.81
Global Average 2.76
Austria 2.74
Ireland 2.64
Japan 2.63
USA 2.62
Israel 2.60
Korea 2.31
Singapore 1.91
Hong Kong 1.34

 

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Greenpeace EU Energy [R]evolution Scenario 2050

Greenpeace International and the European Renewable Energy Council have recently published a set of detailed proposals to dramatically reduce CO2 emissions in Europe. It is a  long, detailed document that many people will not read, although I urge you to try – there are many simple to appreciate graphs and other graphics. The report is, however, a very important analysis, review and set of strategic and tactical proposals to both reduce CO2 emissions and wean us off fossil fuels.

The plan covers from 2010 through to 2050 when 92% of energy will be renewable and CO2 emissions will be reduced by 95%. They claim the total cost is €2000 billion but the saving will be €2650 billion (mostly because of the accelerating rise in the price of increasingly rare fossil fuels).

The aims are:

  • Reduce CO2 emissions
  • Make energy supply more secure
  • Reduce dependence on unsustainable energy source
  • Reduce the cost of energy

There are two scenarios presented as well as a reference scenario – business as usual.

  • Basic  – reduces CO2 by 75%
  • Advanced – reduces CO2 by 95%

The plan presents a review of all current sustainable and unsustainable energy sources, comparing their cost, maintenance cost, CO2 emission and other qualities and so is a very useful source of information as well as a detailed plan for the future including changed business models.

Vision for the advanced scenario

  1. Reduce primary energy demand by over a third from the 2007 level of 73,880 PJ/a to 46,030 PJ/a in 2050. The reference scenario would see demand of 75,920 PJ/a.
  2. Electric vehicles and hydrogen produced from electrolysis. The share of electric vehicles would be 14.6% by 2030 and 62% in 2050. There would also be more public transport.
  3. Increased use of CHP. CHP would be increasingly based on biomass and natural gas.
  4. By 2050, 97% of the EU’s electricity would come from renewable energy. Renewable energy capacity of 1520 GW will produce 4110 TWh of renewable electricity per year from 2050. “A significant share of the fluctuating power generation from wind and solar photovoltaics will be used to supply electricity for vehicle batteries and produce hydrogen as a secondary fuel in transport and industry,” the study says.
  5. Renewable sources will account for 92% of heat supply by 2050 with a particular focus on biomass and geothermal.
  6. Finally, 92% of final energy demand will be covered by renewable energy by 2050.

“To achieve an economically attractive growth of these resources, a balanced and timely mobilisation of all technologies is of great importance. Such mobilisation depends on technical potentials, actual costs, cost reduction potentials and technical maturity,” EREC and Greenpeace say.

 Some details

For the advanced model here are the relative global usage figures between 2010 and 2050 for fossil fuels.

Source         2010      2050
Oil              155,920   51,770
Gas            104,845   34,285
Coal           135,890     7,501
[figures in PetaJoules to make comparisons simpler]

Also for the advanced model here are the planned European sustainable sources of electricity between 2010 and 2050 in GigaWatts.

Source             2010      2050
Hydro                 140          163
Biomass                20         100
Wind                      57        497
Geothermal           1           96
Solar elec               5        498
Solar heat              0           99
Ocean                      0           66
Total                   223     1,518

Part of the plan which may be contentious is that the plan involved around a 36% reduction in energy consumption across Europe from 73,880PJ/a to 46,030PJ/a. This reduction is critical if fossil and nuclear are to be phased out and would be made up of efficiency savings but would might include some level of energy use regulation.

  

The full report (4MB), in PDF, can be downloaded here.

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Private final salary pensions hit by government

Steve Webb, pensions minister, plans to change the inflation measure used for defined benefit or final salary private sector pensions.

At the moment these are normally linked to the retail prices index (RPI) measure but the government is set to change this to the consumer prices index (CPI).  This follows last month’s announcement that public sector pensions will use CPI. The CPI is usually lower than the RPI, which includes housing costs such as mortgage interest payments and council tax whereas the CPI does not. This change alone will cut these pensions by up to 25%. About 12 million final salary members will be affected and should additional private savings to fill this future gap.

Unsurprisingly the CBI welcomed this move, claiming CPI is a more accurate inflation measure for pensioners who often have no mortgage.  However, TUC general secretary Brendan Barber branded the change a “stealth cut”.

“The new Government undoubtedly deserves praise for their early commitment to linking the state retirement pension to the higher of earnings or prices but it now looks as if most other pensions will go up less than they used to in most years. Over someone’s whole retirement this will add up to a significant loss. This is a stealth cut on the pensions of middle income Britain.”

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Ethical Investment and some journalists

I wish journalists would do their homework,  instead of using easy headlines and scaremongering,  suggesting that ethical and environmental funds are an underperforming.  They should read the Mercer Report commissioned by the UN, which clearly showed that ethical and environmental funds need not  underperform – they looked at the 20 year picture.

Of more concern,  is the failure even in articles in serious papers and journals, to look at the bigger picture:  that we will need to develop and invest in  a variety of energy sources to meet our future domestic and industry needs as well as reduce our dependence on imported fuel from unstable regimes that may decide to stop supplying the UK. Nnuclear alone cannot fulfill that and electric cars are still on the starting blocks,  suit short journeys etc.

It is worrying after so many years, that ethical and green funds are being discussed in some flippant,  faddish way,  rather than arising out of an intelligent,  considered  strategy to deal with conventional government and bigger business failure in previous decades to plan for the longer term for all of us. The earliest investors in wind energy were aware investors with modest lump sums willing to be the pioneers of new technologies.  Wind energy is now being embraced by much larger firms such as EDF.   The companies and the technologies behind SRI can deliver performance and jobs if we have the patience and foresight to realize and our need for them  is greater than ever.

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Is there an ethical way to buy a house?

Recently in the Independent on Sunday on of our advisers, Helen Tandy, was extensively quoted for advice on house buying.

The full Story http://www.independent.co.uk/money/spend-save/wealth-check-is-there-an-ethical-way-to-buy-a-house-2017684.html

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Green Investment Bank

 The Green Investment Bank Commission recently submitted their report to government.

The driving force behind the Green Investment Bank (GIB) is that the UK needs to move to a low carbon economy within the next 40 years. The reductions already decided by government are 20% by 2020 and 90% by 2050, these both relative to 1990 levels.

 The report [ http://www.climatechangecapital.com/thinktank/ccc-thinktank/publications.aspx ] is very wide-ranging and comes up with a complete set of suggestions, many already welcomed by the broad green movement, for example http://www.foe.co.uk/resource/press_releases/green_bank_29062010.html .

 GIB is needed because of the failure of traditional funding methods and the large number of previous government initiatives. It would ensure energy security and reduce exposure to increasingly high and volatile fossil fuel prices. It is also hoped it will create lots of new businesses and jobs.

 Although GIB will look across the range of CO2 reduction methods it will focus on energy generation, efficiency and distribution because it accounts for the largest single emitter. However, in this area the UK is quite far behind in both the amount of renewable power in current use and in 2020 targets across Europe. We currently have rather more renewables than Malta and Luxemburg. Our 2020 target of 15% is behind 17 countries and ahead of only 9; it’s also behind 10 countries’ 2005 actual renewables.

 The amounts of money claimed to be required are pretty staggering. In between £800bn to £1000bn is required up to 2030 – that’s £40bn to £50bn per year. £200bn of that is needed up to 2020 just for current UK energy policy commitments.Around £550bn (£55bn pa)  is needed for the UK’s low carbon infrastructure – this is a step up from our spend of £6bn in 2009.

 Where will all the money come from? This is one of the things that will no doubt be argued over and decided politically.

  • Start up capitalisation could come from the private sector banks including those owned by government, the new bank levy and bonus tax, bank sales, UK share of the EU Emissions Trading Scheme auctions [£40bn 2012-2020], sales of government owned assets.
  • For grant aid it would get the money from the government as the taken over 9 quangos and funds current do. [ £2.2bn ]
  • For on-going activities and investments the possible sources are capital markets, taking over the CERT levy on energy bills, GIB debt fund and the sale of externally rated Green bonds and ISAs to the public. 

Organisationally GIB will be a public body accountable to government but with commercial independence. It is suggested that its board be made up from private sector entirely. It will work closely with the banks and other financial institutions taking care intervene only when the private sector fails to. It will also take over all previous government quangos and funds that address carbon reduction. Profits from GIB will be re-invested in its core aim of reducing carbon emission.

 GIB will cover both large infrastructure investment down to individual domestic generation and insulation. If necessary it will buy completed renewables assets such as wind farms. It will provide insurance to renewables projects and underwrite long-term carbon pricing.

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