There is a change on the horizon. People are beginning to ask questions about where banks and pension companies invest our money.
Do we want our hard earned cash supporting child labour or financing wars? Investing in ethical companies is becoming big business. According to the Ethical Investment Research Services (EIRIS), last year saw demand for green and ethical investments increase sixfold to over £7 billion. The quarter to the end of September 2007 saw a 600% net increase compared with the same quarter in 2006. EIRIS has produced a number of guides on ethical investment, including ones on pensions, funds, banks and charities. They can be dound at www.eiris.co.uk. This year, the first ever National Ethical Investment Week will take place in May. More details can be found on their website www.neiw.org
The UK Social Investment Forum (UKSIF), whose Chief Executive Penny Shepherd has a long history in responsible and ethical finance, has over 200 members and is the network for sustainable and responsible financial services. UKSIF promotes responsible investment and other forms of finance that support sustainable economic development, enhance quality of life and safeguard the environment. They even provide a free training course on green and ethical investments for financial advisors. Find them on www.uksif.org. And, if you think that green and ethical funds are not good value, here is what James Dalby, Fund Propositions Manager at Norwich Union has to say, “There are many myths surrounding green and ethical investing. One example is ‘ethical funds usually under-perform’. This is generally untrue – and National Ethical Investment Week will help to bust this and other common myths surrounding this growing area.”
You may wonder why Kent County Council’s Pension Fund, which currently administers the investments for 25,000 employees considers that returns from British American Tobacco, an £11 million investment, BAE Systems, the fourth largest arms manufacturer in the world, a £14 million investment, Japan Tabacco £5 million investment, Anglo American, the global leader in mining a £22 million investment are the sort of investments its pensioners would wish to consider. Nick Vickers, Acting Director of Finance at KCC maintains that in order to maximise funds, investment managers must be able “to invest in companies that they think will generate strong returns, we do not limit what managers can do by giving them types of companies, whether those relate to armaments, tobacco, alcohol or any other “ethical” parameter.” I spoke to an employee of Kent County Council, who does not wished to be named and she said she had no idea that her pension contributions were supporting the arms and tobacco industry. She claimed, “It seems extraordinary that KCC strictly enforce a no smoking policy, yet at the same time, invest in the tobacco industry and the fact that I am indirectly financing wars is totally unacceptable.”
The Ecology Building Society has been in business for over 25 years providing ethical savings accounts and green mortgages. They are unique as they only provide mortgages for properties that benefit the environment in some way. The main lending areas are:
You can contact them on www.ecology.co.uk for more information on their lending and saving criteria.
For those of you who want to examine your bankers - or who want to bank more ethically - Triodos Bank finances companies, institutions and projects that add cultural value and benefit people and the environment. They currently invest in renewable energy projects, organic concerns and other environmentally conscious schemes, see www.triodos.co.uk. The Co-operative Bank is another financial institution that has good ethical and environmental standards, see www.co-operativebank.co.uk. And, if you run your own business, there are schemes to help you ‘green’ your office. The Enhanced Capital Allowances are a way for businesses to improve cash flow through accelerated tax relief. A little known publicised scheme is with the Carbon Trust which, allows releif for energy saving technologies. More details can be found at www.eca.gov.uk/energy The South East England Development Agency has a whole section devoted to sustainability issues and can be found at www.seeda.co.uk
The best advice I can give you is to read the small print and ask questions of your pension fund supplier. A small investment of your time could save a lot of pain in a laboratory, sweatshop or far away country.
Penny Kemp is a broadcaster and writer and runs The Headcorn Sustainability Group and is currently working on making Headcorn and the surrounding area a low carbon community. www.headcornsustainability.co.uk