Worldwise Investor Blogs

Lies, damned lies and sustainability reports

2012-05-15 12:00:00

How much is 122 billion tonnes of carbon dioxide? If you think it sounds like a lot, you’d be right – it is more than four times the entire planet’s production of CO2 in 2009. It is also the amount that Italian energy utility Enel reported that it produced in 2009. As the researcher who uncovered this pointed out, any credible attempt to combat global warming will clearly have to start in Italy.

What the shale oil counter-revolution means for clean energy

2012-05-10 06:00:00

More big changes are afoot in the shifting sands of the global energy industry. Crude oil derived from shale formations (‘Shale Oil’) suddenly has the potential to create an abundance of hydrocarbon energy for transportation, where previously it was in short and ever-dwindling supply. For now this is a phenomenon unique to the USA, but has the potential to spread around the world.

Financial services least-trusted industry

2012-05-08 12:00:00

To the surprise of presumably almost nobody, the economic crisis has made the general public more than a little wary of the financial services industry. The latest 'trust barometer' published by Edelman suggests that the financial services industry is trusted by only 41% of people in the US, but by only 29% of people in the UK. British bankers in turn should count their blessings. If they were Spanish, less than one in five would believe they were trustworthy. This isn't a purely European phenomenon. Even in the US, where people are generally more trusting of business, the financial services industry is now the least trusted industry of all - even less than journalists. In fact, the financial services and banking industry is on average now the least trusted sector in the world according to Edelman.

A shareholder spring

2012-05-03 12:00:00

As the FT pointed out today: “shareholders are revolting, and not in the way Occupy might claim.” One positive consequence of the financial crisis is increased scrutiny of executive pay with shareholders no longer content to sit back and see executives take home excessive pay packages.

Sarasin help the IFA community look beyond just financial returns

2012-05-02 12:00:00

I can fully recommend taking up the offer of a meeting at Sarasin's offices. The Board room where the EIA (Ethical Investment Association) met on Tuesday must be one of the most interesting board rooms in London to have a meeting, overlooking as it does St Paul's Cathedral and the London Stock Exchange. The lunch laid on by Sarasin for the EIA members was fantastic and the day was well attended and thought provoking...

A great quarter for ethical stocks

2012-04-25 14:27:48

Commentators and IFAs are fixated on how ethical screens impact on the risk an investor is taking and the returns he can expect as a result. At Holden & Partners our experience when looking at the UK stock market is that ethical stocks do perform differently to the stock market as a whole, but it depends on the time period being analysed. We have just moved through a great quarter for ethical stocks!

Market background still positive for energy efficiency

2012-04-17 12:00:00

I recently attended the UBS Global Clean Energy and Utilities Conference and met with some analysts in the clean tech field. It is clear that the market backdrop is still more favourable to energy efficiency, whereas the renewable energy sector continues to be challenging.

Oh dear what can the matter be

2012-04-15 12:00:00

Henderson, Aviva, SWIP and of course F&C.... have all had strategic reviews or are in the middle of them and cutting through the PR jargon it seems 'ethical' investing is under attack. At least ethical investing as we know it. Now many of you might say, 'well who cares?' I make no judgement on what investor reaction will be to this, but what I think is needed is a good dose of honesty, because the PR spin is just too much and gets under my skin. The truth is, whether investors care or not, top management at the Investment Houses really don't. The old paternal management of the Insurance Companies has well and truly gone and it has been replaced by a calculating, and to a point cynical, professional manager who simply does not believe in the old style 'ethical' fund.

Solar shakeout: sun rise in the East, set in the West

2012-04-04 12:00:00

This week Q-Cells, once the world’s largest solar manufacturer, filed for insolvency. Its share price dramatically fell below €0.2 from its peak of €80 back in 2007. As an investor who has been following the solar industry for many years, I have very mixed feelings about the fall-out from this German solar company. Q-Cells is not an isolated case - there have already been a number of bankruptcies in the solar industry since last year - but it is nonetheless a rather symbolic event.

The fallout from UK new nuclear

2012-04-02 12:00:00

Last Thursday, the two giant German electricity utilities E.On and RWE announced that they would abandon their plans for new UK nuclear power plants. This is a major blow for proponents of the technology here in the UK, and creates serious problems for much-heralded ‘third generation’ of UK nuclear power. It is also a big U-turn for the two companies, who had invested considerable resources into the programme.

Solar energy commitment underlines value of investor engagement

2012-03-26 12:00:00

Over three years ago, I co-launched a programme to encourage the solar (PV) photovoltaic industry to address the social and environmental impacts of the manufacture and deployment of the technology. In late March 2012 this initiative took a critical step forward when the US industry formally launched their commitment to sustainability.

Resource scarcity challenges Grantham's 'impregnable faith in mean reversion'

2012-03-19 12:00:00

In mid-March we were lucky enough to hear Jeremy Grantham speak in London. For those unfamiliar with his work, Grantham is something of a living legend in the investment community. He is the founder of GMO, a global asset management company which now has nearly $100bn under management. The success his investment skills brought him with GMO has allowed his foundation to sponsor two of the UK’s leading climate change research organizations: the Grantham Institute at Imperial College, and the Grantham Research Institute at the LSE.

Resource scarcity represents a spectacular investment opportunity, but handle with care

2012-03-15 12:00:00

As an undergraduate studying environmental science in the 1990s, one of the first tasks I was asked to consider was why the authors of the seminal 1972 report 'The Limits to Growth' were wrong. This report, produced by the influential think-tank, The Club of Rome, had confidently asserted that increases in human population, industrialisation, pollution, food production and the depletion of natural resources would ultimately lead to the collapse of critical ecosystems. At the time, several commentators retorted that the authors had not properly accounted for technological responses to these trends, and this was the critique adopted by our university lecturers.

Can the 'Governator' tackle climate change?

2012-03-15 12:00:00

Arnold Schwarzenegger, AKA ' the Governator' created R20 (a coalition of regional governments aiming to tackle climate change and initate low carbon projects) in 2011 as Governor of California. We examine the power of regional Governments to effect action on climate change ‘from the bottom up’, irrespective of the pace of action ‘top down’ from national Governments and internationally.

The Green ISA - What happened to it and why it is important?

2012-03-07 12:00:00

The current position paper on Sustainable Capitalism from Generation Investment Management makes some excellent suggestions on how to address current market failures, but it does not address one central element to the investment community – the end consumer. There was a time when it seemed that the Conservatives were going to take up this mantle with their 'Green ISA'. Where is it now? The end investor seems to have been forgotten by both government and Generation Investment Management in considering how society becomes more sustainable. We should not forget the retail investor because all investment in the end is responding to end demand.

WHEB Group makes a big commitment to Green Investment and Sustainability!

2012-03-05 08:00:00

The wait is over...where have George Latham and Tim Dieppe gone? - Wheb Asset Management! While it may not be time yet to break out the champagne - put a bottle in the cupboard! There are serious people prepared to commit serious money and effort to 'sustainability' as an investment formula worth pursuing. The announcement today that a core part of the old SRI team from Henderson have been hired by Wheb Asset Management is a shot in the arm for Sustainability investing in the UK which the retail market badly needed.

Henderson's 'less is more' strategy is the start of an 'Ethical Shake Up'

2012-02-14 12:00:35

Today Henderson have announced a whole series of consolidations to their fund offerings. By streamling their operations and giving their fund managers more focus, they hope to drive both new funds under management and profits up. This is the end of the beginning for the new SRI team at Henderson and will give them a substantial platform to move forward with. But for ethical investors it might just be the start of a series of fund consolidations as Investment Houses take action prior to regulatory change post 2012.

Profit is what the change at Henderson is about

2012-02-10 17:05:48

Profit and efficacy is at the heart of the changes that Graham Kitchen, Head of Equities at Henderson Global Investors, has made and it is a reminder to the ethical and SRI community that this is essential to the sustainability of an Investment House's offering.

Do 'ethical' funds de-risk a portfolio?

2012-02-02 12:21:31

In an article posted on New Model Adviser I suggest that 'ethical funds' should be considered by investors and advisers as a way to de-risk a portfolio. This drew the response from one commentator that I have a 'lack of understanding of risk that borders on the cavalier'. Hmmm do I? or am I actually thinking about risk in the future, rather than looking at an old text book?

How Capital Markets and the West laugh in the face of carbon emissions - while looking holier than thou!

2012-01-28 13:21:31

The recently issued Carbon Tracker report about the exposure of the FTSE 100 to coal mining highlights not just the risks to investors, but the way that capital markets and nations can disregard carbon pricing, while looking holier than thou, in their investment and policy decisions because of the regional nature of the carbon price. The investment and policy surrounding Australian mining provides the perfect example.

Continued inaction at the UN has lost business and investor confidence

2012-01-27 12:00:00

The more annual UN Climate Change conferences one observes, the clearer the inaction becomes. In addition, the longer ones’ perspective on these global efforts to contain greenhouse gas emissions, the clearer it becomes how little has been achieved, with essentially no global progress towards a 50% cut in emissions over the last 20 years.

EIRIS is not just about Ethical Investment these days - How we help responsible investors too!

2012-01-26 16:09:59

EIRIS were recently appointed by Henderson to replace their SRI team. We are concerned that some investors are not aware of all that we do. Here I try and give you some background...

The Carbon Bubble - who is listening?

2012-01-24 09:59:00

Today on Radio 4 Lord Lawson was asked to discuss climate change. Afterwards I saw this tweet - "Why bring on Nigel Lawson to debate climate change, it's like bringing on John Terry to debate Plato". I wish I could claim this quote. It is the sort I like - a bit extreme, but it makes a good point! Thank you Andy Spain and Twitter. What is clear though is that big oil and all its money is winning the PR campaign and this is very worrying, because rather like the titanic our society is not invincible.

Germans show green investors and politicians how to build Solar

2012-01-21 14:23:36

The amount of solar which has been installed in the UK over the last 2 years has become a focal point for both the government and renewable commentators, with the recent High Court judgement declaring the feed-in-tariff cut 'unlawful'. But when you compare the amount of solar installed in Germany and other European countries with that installed so far in the UK it is difficult to understand the government's position. The British public should understand that this is a bit of a storm in a tea cup, because no scale has been achieved in solar in the UK yet - our efforts are dwarfed by Germany.

Ethical investment at a watershed - Aviva's review next!

2012-01-11 11:15:27

Henderson's decision to substitute their SRI team with EIRIS has sent shock waves through the ethical investment community. The implications of which have not yet been felt and are not yet known. But while everyone discusses Henderson lets not forget that a strategic review is due out at the end of January for Aviva; and F&C are still trying to work out their long term direction after acquiring Thames River. Will Aviva and F&C choose a similar route? It is difficult in this environment for investors to make any decisions. One thing is for certain - there is more change to come!

Animal welfare not just an issue for ethical investment funds?

2012-01-09 09:09:04

In the past, poor corporate performance on farm animal welfare grounds led some ethically-motivated investors to screen out companies, but responsible investors are increasingly becoming aware of the link between farm animal welfare and financial value, as apparent from a recent UKSIF investor analyst seminar on farm animal welfare.

Unbalanced news shows the environmental message is not getting through

2012-01-06 09:44:25

In yesterday's Cityam an article was published entitled “Going Green isn’t easy when you’re so far in the red”. There is nothing wrong with this statement, but rather the nature of the following text, which seemed to suggest that Shale Gas is the answer to our problems, while omitting to point out why it might not be and specifically why it might blow apart any pretence at de-carbonising society.

Long term economic forecasts are flawed

2012-01-04 13:15:05

Schroders have recently produced an excellent paper called "Ecosystem Services - Where's the discussion?" which highlights the gap between economic thinking and the natural world we live in. The paper highlights the reality gap between what the world can do for us i.e. our ecosystem and future growth prospects. This paper sits comfortably with Jeremy Grantham's recent analysis of the world's resources and his warnings that past civilisations have disappeared under similar constraints.

Barkering mad solar cut shows lack of judgement

2011-12-21 21:00:00

What ever you think about the solar tariff cut and the rationale behind it, Mr Justice Mitting stood up for the rule of law today and respect for due process, in his decision to declare the government's December 12th tariff cut unlawful. This is a victory for fair play and ensures that in the future the UK government cannot ride roughshod over legal process. It is staggering really that Ministers could behave this way and indicative of both their arrogance and lack of judgement.

Climate change scepticism is a luxury for the powerless

2011-12-20 09:00:00

While the politicians in Durban have deferred commitments to carbon reductions to a later date post Kyoto, the science behind climate change and the fears that this brings for the future remain. However much we ignore it, scepticism around climate change is still strong. There have been too many times in the past where society has been scared into preventative action that convincing the public that climate change does exist, is being caused by human activity and needs to be acted upon, becomes harder and harder. Climategate has done nothing to alleviate this problem.

Do Public Sector Pensions add up?

2011-11-30 00:00:00

Today various groups of public sector workers are going on strike over pensions. Of course on a personal level we can all have huge sympathy, but government needs to make judgements on what is fair to all. At the moment the government is running the country on one ginormous credit card and public sector workers' pensions are far superior to their private sector compatriots and cost those same workers a lot of money.

Deepwater Horizon: one year on

2011-11-30 00:00:00

BP's Deepwater Horizon sparked criticism from regulators, investors, the public and media in the U.S. Yet many oil spills in the global oil & gas industry - before and after BP's disaster - are largely overlooked in the U.S. and Europe.

Shareholders rock Hargreaves Lansdown over pay

2011-11-26 00:00:00

Australia have given shareholders the power to call Directors to account for their pay packets in a way which is causing a bit of a stir. This change is indicative of the impact that the financial crisis is having in company boardrooms by politicitians determined to show they are doing something and that shareholders can make a difference. Yesterday the Guardian reported that shareholders rocked Hargreaves Lansdown.

Degrees of Responsibility

2011-11-23 00:00:00

The movement by institutions towards responsible investing, by which shareholders actively engage with the companies in which they invest to enact change is a very positive step. However, investors who are concerned about the environment should not necessarily see this as the solution, because 'responsibility' as it is defined by the UNPRI does not mean a fund, or institution will make a stand over what a person on the street may be deem an acceptable level of environmental impact. The London pension Fund Authority (LPFA) provide an interesting case study in this regard.

Lets support City A.M.'s first Christmas Appeal

2011-11-21 00:00:00

Christmas is a time for giving and we should all think about what this means to us. The Guardian have launched a charity campaign at Christmas for a number of years, but have not, to my knowledge, yet announced what they are going to support this Christmas. CITY A.M. launched their first campaign today for a very worthy cause, which we hope will be well supported in the City.

Ecobond two is positive for renewables, but sparks a need for legal change

2011-11-08 00:00:00

The launch of the ecobond two by Ecotricity Group Limited to retail investors is a very positive development for UK renewables and proves that even with the financial crisis and tough bank lending conditions it is possible for UK businesses to get the funding they need. At Worldwise Investor we hope that this begins a trend in the market which others can follow, but we would like to see minor ammendments to the law to give both companies and investors a better deal.

How much of the National debt do you owe personally?

2011-11-06 00:00:00

Angela Merkel said this week: "Almost all European countries have spent more over the years than they have earned." So western democracies have been living beyond their means. But what does that mean? Just how bad is it?

Investors do not despair, but Mr Barker, 'What are you committed to?'

2011-10-31 00:00:00

In a speech on 27th October to Solar Power UK Greg Barker, Minister for Climate Change, opened with “I haven't come here to kill the tariff scheme”. Why did he make this statement? And why less than a week later has he specifically targeted investors and killed the scheme in all but name.

Short-termism rules UK energy policy and investment

2011-10-24 00:00:00

Ethical Investment week has passed and commentary focused familiarly on ethical screening rather than the bigger challenges our society faces. Investors do not seem to be that interested in the long term picture and how investment should change to reflect the challenges we face.

So now we are in National Ethical Investment Week...

2011-10-17 00:00:00

This is the one week in the year in which "ethical investment" should get some focus in the news. With the Greek crisis yet to play out though it is difficult to get the media to engage in longer term problems. There is simply too much else going on.

Do Pictet have the new breed of 'Responsible' funds

2011-10-16 00:00:00

Investors and IFAs think of ethical screens as being at the start of an investment process - a sieve after which a fund manager can pick at will. There is an assumption that this sieve materially impacts on the investment universe and thus must hamper performance, but there are a new wave of environmental funds with some ethical screens in place, which you may not even know exist.

Water could be the front running theme?

2011-10-10 00:00:00

This morning I was at an UKSIF event at Henderson Global Investors as a forerunner to Ethical Investment Week which starts on Sunday. Penny Shepherd, chief executive of UKSIF, made the point that upwards of 50% of consumers make ethical consumer choices every day at the shops, but that to date this is not followed up with their investments. The financial crisis has not helped the development of this market, but the panel felt that it was a question of time. It was when, rather than if.

A day in the Supreme Court...what next?

2011-10-03 00:00:00

On Friday 30th September 2011 Worldwise Investor as the lead sponsor, helped showcase a trial to help investors and corporations understand the potential implications of a proposed ammendment from Polly Higgins to the Rome Statute of 2002. This would make ecocide the fifth crime against peace under international law, to join genocide, crimes against humanity, war crimes and crimes of aggression.

The markets are in turmoil.. run.. or invest?

2011-09-27 00:00:00

"Past performance is not a guide to future performance". You may have seen this a few times written next to investment products or near to performance figures for investment funds.

A tale of two themes - Agriculture and Clean Energy

2011-09-19 00:00:00

Clean Energy and Agriculture have had very different fortunes since the financial crisis broke in September 2008. Clean Energy funds are back down to their historic lows.

Why wouldn't you invest sustainably?

2011-09-16 00:00:00

Forum for the Future have set out their vision for a sustainable economy in 2040 and a call to action for investors to both profit and help change the global economy to enable humanity to thrive in the future. The report also highlights the extra investment risk investors are running by ignoring the environmental and social boundaries we need to live within.

FT label ethically screened fund as a 'closet tracker'?!

2011-09-10 00:00:00

The FT suggested today that many investment funds are "closet index trackers" and asked if they added any value. When you look at the performance evidence behind the story there is much to question (of the 152 funds analysed, only 37 failed to beat the FTSE All Share).

My point though is that the article included the Aviva Sustainable Future UK Growth fund in its analysis, which somewhat weakens the FT's hypothesis. This fund ethically screens out a good chunk of the market and so while performance might have been similar to the index, there is nothing index tracking about this fund.

History does not favour tracking the FTSE 100

2011-09-10 00:00:00

David Schwartz's "Trader's Diary" in the FT today raises some interesting historical points which should be deeply worrying to those who subscribe to an investment philosophy dominated by index tracking funds.

What a hangover!

2011-09-05 00:00:00

I have just read a very interesting personal view of where the world is now by Edward Hocknell from Baillie Gifford, called "Liquidity and the End of Debt - A Personal View". In summary, the developed world spent a number of years getting drunk on debt and we are now having a major hangover. It is something we should be thinking about as investors and I thought it worth while summarising..

A day in the life of news

2011-09-01 00:00:00

Today there are so many ways of communicating and so many people out there making noise that it is often difficult to get an overview. What is clear is that there are millions of people pulling the world one way and millions more pulling in almost exactly the opposite direction. These are some of the stories I picked up just today...

Carbon emissions are out of control

2011-08-28 00:00:00

There is a self-preservation rationality to those who deny climate change. What hope for the human race if the science is true? But Investors cannot afford to bury their heads in the sand, the recent sand bag fortifications in Manhattan may prove to be an early warning to the financial world. It is also a sign that investing thematically is not necessarily feel good.

Investors have ridden Lehman's demise

2011-08-26 00:00:00

For all the crisis and doomsday scenarios, investors in the stock market have not yet been hit badly - that is if they held their nerve and stayed in the market through all the turbulence.

Environmental investment is about long term returns and should not be dismissed

2011-08-18 00:00:00

Environmental investment is one aspect of thematic investing, but I get the sense that there is often a negative aura in the UK retail investment market around environmental funds, that they will not perform, which goes against the grain of current business philosophy and practice.

Worldwise Investor - a key to knowledge

2011-08-16 00:00:00

The financial world is complicated. Investment funds are supposed to make this easier for the man on the street - the idea is that by buying a fund you employ the expertise of the fund manager to select appropriate stocks and achieve diversification to avoid making mistakes. However in our journey in setting up Worldwise Investor we have learned that it is not that simple and IFAs and Private Investors are getting highly filtered news and products, which are not necessarily in their long term interest, or meeting their needs.