What do they do with your money?

logoDid you notice it was Good Money Week last week? The annual campaign to raise awareness of responsible finance so people can make informed choices about their money’s impact could do with a little more oomph.

Surprisingly few of us realise how great an impact our money can have.  The pounds in your pension could have a much greater clout than Fair-trade coffee.  As John David, Head of Rathbone Greenbank Investments, quoted in a related Good with Money article, explains “Avoiding companies that contradict personal values and actively making ethical choices as a consumer is a great first step, but the possibilities for any long-term, tangible impacts often stretch beyond simply boycotting a particular brand or product.”  Shareholders can play a powerful role in shaping behaviours companies, and the financial system.

This short (ish at 3:30 minutes) video from Aviva illustrates how our savings are linked, via the investment system, to companies. As the video shows, as the ultimate owner of the money, pension savers can influence, where and how money or funds are invested. The intermediaries, pension providers, and investment fund managers, should be communicating with savers about how they engage with companies’ on the issues that savers care about from climate change to executive pay.

Nearly all (97%) of the CEOs in the latest UN-Global Compact-Accenture CEO survey believe sustainability is important to the future of their business. 59% of CEOs say that they are able to accurately quantify the business impact of sustainability initiatives. Yet, only 10% report that investor pressure is one of the top three factors motivating them to take action. Why are investor voices not louder?

At Good Money Talks, Simon Howard, CEO of UK Sustainable Investment Forum, shared UKSIF’s research shedding light on savers’ disengagement. Essentially, 60% of 25 to 34 years olds do not know that there are sustainable financial products available, but 55% of them would like to choose fossil-free financial products.  Earlier that day, Andrew Bailey and officials at the FCA voiced concern that saving rates are low, particularly among younger cohorts. The UKSIF research offers one insight into why: the products on offer do not appeal. Greater transparency and product choice are why I choose to save in an ISA or invest directly through crowd-funding platforms rather than top up an old employer pension.   The onus is on the industry to do more to tell their customers about all the available choices.  It might just motivate people to save, if they felt empowered and enthused by the ability to fund the future they want to live in.

The conflation of ethical, responsible, sustainable labels is also confusing and polarising. Bruce Davies, co-founder and Managing Director of Abundance Investment  remarked we need to move away from divisive to inclusive language, “I don’t think there’s a difference in ethics. People young and old worry about the future”.  Some still think there is a binary choice between strong environmental, social and governance performance or financial performance. Thankfully research abounds that debunks this view (see right).  Incscreen-shot-2016-11-09-at-13-40-39reasingly sustainability management is taken as an indicator of a company’s sound management, innovation and the potential for long-term value.

Environmental, social and governance factors are all business risks that manifest over longer time horizons, the horizons that many of us have as savers. Climate change and the risk of stranded assets are now widely accepted, though not necessarily yet widely reflected in the options available to savers. The Financial Stability Board’s Task Force on Climate-related Financial Disclosures is working towards a single framework on climate risk exposure, which will drive transparency of companies, and funds’ exposure to climate risk. Michael Bloomberg, Chair of FSB notes, “Increasing transparency makes markets more efficient, and economies more stable and resilient.” Disclosure is important, but does not necessarily drive action, unless the risks are communicated through the investment supply chain to the ultimate asset owners, the savers.  The industry needs to explain how greater stewardship with and on behalf of savers to mitigate these risks is in all our interests.

cwbif4iwiaegmyjIt is incredible that pension funds investing the savings of millions of people resist engaging with them. Pension providers are editing savers’ choice, with out asking about their preferences for the allocation of their capital. Recently, I co-chaired ShareAction’s Pension Power Parliament at the House of Commons where members of a range of pension schemes shared stories of perseverance and occasional success, such as Royal London’s appointment of a customer representative to its independent governance committee (IGC).  We have a long way to go before savers can compare providers, and the underlying funds.  Pension providers could make more use of  digital platforms to deliver engaging and useful toolkits to ensure savers are putting aside enough for the future, and for savers to collectively to feedback their preferences.

Those within the financial industry need to do more to engage, educate, and enable their customers to make prudent, informed choices about their future.  If you want to know what they do with your money, ask your provider.  You could also join a ShareAction Pension Power team for a louder voice.

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Click to access ifc-businesscase.pdf

A little nudge goes a long way

COS5Ko7WcAAgP2s.jpg-largeUsage of single-use plastic bags dropped over 80% after the introduction of a 5p charge last October.  In the first six months, 640 million plastic bags were used in seven major supermarkets in England, compared to the 8.5 billion single-use plastic bags used in 2014, according to WRAP. To get a sense of scale, 6 billion bags laid end-to-end it would stretch about 75 times around the world. Through the levy, £29.2m has been raised for good causes, and the government estimated that fall in use of single-use carrier bags would save £60m in litter clean-up costs.

It is tempting to ask what took so long, but more fruitful to ask why it was so effective, and where else is a little nudge long overdue.  In the same week, Hugh Fearnley-Whittingstall’s latest War on Waste hit our screens railing against the mountains of coffee cups from large corporate chains littering our cities. As I watched Fearnley-Whittingstall’s BBC programme, I was struck by the many similarities between coffee cups and plastic bags.  Both involve large corporate companies, familiar brands from our high-streets, providing pernicious solutions to take away perishable goods at no obvious, or immediate cost to the consumer.

But first the problem, whether a nation of tea-drinkers or coffee-addicts, the British are taking away more than 7 million cardboard cups a day, or 2.5 billion a year, and less than 1 in 400 are being recycled. We think paper cups are a green option, but they are typically neither made of recycled material nor practically recyclable.  The cups have a polyethylene liner to make them waterproof.   As the thin seam of paper inside the cup comes into contact with the hot drink, cups must be made from virgin paper pulp to avoid leaching of any dyes from recycled paper.

The cups can technically be recycled (and may be labeled as such), but only specialist recycling facilities can separate the liner from the paper. There are two such facilities in the UK, reports Fearnley-Whittingstall, one has never recycled a paper cup and the other has processed a tiny number. For example, Costa sends less than 1% of its cups for this treatment. A cardboard sleeve may be labeled as recyclable, and would be, if it were separated from the actual cup. The misinformation and misunderstanding compounds the problem as well-meaning customers throw their cups into recycling bins, inadvertently contaminating them.

bpnjtjsiuaenn2aSome coffee chains offer a small, money-off incentive for bringing your own reusable cup. The incentive is rarely advertised, staff often do not know about it, and the onus is on the customer to ask. Unsurprisingly take up is limited. I see a few more reusable cups, helped by the arrival of colourful KeepCups from Australia, but the occasional 10p or 20p discount has had far less impact than the 5p levy for a bag.

So why has the little nudge over plastic bags led to an outsized shift in customer behaviour? Behavioural science offers an explanation. Unlike the “economic man” or homo economicus characterized in classical economic theory as consistently, rational and self-interested, we are not always rational, or fully-informed when making decisions. In their book, Choices, Values and Frames, Kahneman and Tversky argue that humans respond differently to charges and discounts because of framing: the discount is considered a gain, and the surcharge as a loss. Humans are loss averse, the pain of losing is psychologically estimated to be twice as powerful as the pleasure of gaining. So penalty frames can be more effective than reward frames, a charge more effective than a discount. Other effective drivers for behavioural change include the fact we are strongly influenced by the behaviour of others, that we are often influenced by subconscious cues, and we try to act in ways that make us feel good about ourselves.

So if large (or indeed small) coffee-chains are serious about reducing the waste mountain, their efforts could be cannier. Making any discount incentive prominent at the point of sale, along side a reusable cup available for purchase would be a start. Charge more for a coffee served in a not-so-disposable paper cup. Tweak existing marketing tactics to transition more customers on to reusable cups, for example, offer a free reusable cup with your tenth coffee. The cup would of course be branded, and by parading it in the street we would be subconsciously signaling our own virtue and that of the coffee chain. The reusable cup is also perfect corporate gift, or secret Santa.

crse4c2wiaa_cokWhere there is no alternative to take away, better options are available from suppliers, such as Frugalpac. The food service industry needs to up its game and ensure packaging is actually composted or recycled. A quick break at a motorway service station or stroll down a city street will highlight just how far there is to go here! If self-regulation and industry collaboration fail, then this week’s statement from the Liberal Democrats hints at what might follow.

Sometimes, in the words of the environment minster, Therese Coffey, “small actions can make the biggest difference”, and there is much to be said for taking the time to savour the coffee in situ.

Related links:




Gächter, S., Orzen, H., Renner, E., & Starmer, C. (2009). Are experimental economists prone to framing effects? A natural field experiment. Journal of Economic Behavior & Organization, 70, 443-446.

Picture credit: the Liberal Democrats

How does your garden grow? A look back at RHS Chelsea

FullSizeRenderRHS Chelsea Flower Show burst into bloom, and our television screens, at the end of May, perfectly timed for superlative displays of plants and gardens.  Far from a horticultural expert, I went, with my Mum for a great day out, free to wander and see what caught our eye.  There were exemplary specimens and designs on display, fit to make the gardening enthusiast swoon, marvel, and for some, the occasional wry smile sparked by Diarmuid Gavin’s kinetic sculptures for Harrods’ British Eccentrics Garden; there were also powerful stories about the importance plants, gardens and healthy soils play in our lives.

This year’s aesthetic excellence was matched with celebration of the gardens and plants’ function, spearheaded by the RHS’s Greening Grey Britain campaign. With about 1550 Sites of Importance for Nature Conservation, covering over 30,000 hectares, or 19% of London’s total land area, you might assume that wildlife has space to thrive, but increasingly intense urban development is crowding out wildlife and natural processes.  London Wildlife Trust’s London’s Living Landscapes initiative is working to create a network of natural green spaces, wild and managed, creating ecological networks that link core areas of wildlife habitat via corridors such as embankments, allotments, and gardens.

As the RHS’s 2015 report noted more of us are paving over our gardens, turning our cities grey. Nearly one in four UK front gardens are completely paved over, and London faring worst of all with half of all front gardens paved over, a 36% increase over the last decade.  Paving might be an effective quick fix to a parking problem, but it comes with a big environmental footprint.  Our gardens are vital habitats for wildlife and green infrastructure can maintain effective natural processes that help provide clean air and water, healthy soils, food production and flood management.  Gardens soak up rain, helping to slow run off and reduce stormwater surges into drains. Trees, plants and climbers help summer cooling savings of around 30%, and plants absorb pollutants so we can breath easy.

IMG_0846Designer Tom Hoblyn used mango and palm trees (right), effective green infrastructure, to provide shade and encourage rainfall enhancing the micro-climate in Lifeworks Global’s kitchen garden. Unsustainable farming practices have degraded and polluted the soil in parts of Tamil Nadu, south India. Working with local charity, SCAD (Social Change and Development), Lifeworks provide traditional crop seeds, subsidised water filters and teach families organic farming techniques kickstarting a virtuous circle that heals the soil, and fosters community regeneration.

IMG_0875This year’s RHS Greening Grey Britain for Health, Happiness and Horticulture, designed by Ann-Marie Powell, looks to build resilient communities closer to home. The garden (pictured left), with bright bursts of colour, effused positivity even on a cloudy day. The on-message bee-friendly meadow helps boost the environmental impact, but the garden also addresses broader themes of resilience bringing communities together to grow food with edible potted plants and a small kitchen garden. This model community garden is now being relocated to Angell Town, Brixton.

Gardening gets us moving outdoors, and researchers at Coventry University are using the latest motion capture technology to catalogue the benefits. Their research reveals that gardening can improve bone mineral density, muscle strength, joint mobility and co-ordination.

IMG_0872Several show gardens focused on mental health benefits. The Vestra Wealth’s Garden of Mindful Living and the Morgan Stanley Garden for Great Ormond Street Hospital both took inspiration from the East to create calm sanctuaries for quiet reflection. Jekka McVicar’s garden for St John’s Hospice – A Modern Apothecary, inspired by Hippocrates words, “Let food be your medicine and medicine be your food”, and conversations with medical professionals.  The garden includes plants with known health benefits. Red-leaved herbs, Atriplex, Beta, Brassica and Lactuca, are high in anthocyanidins, strongly linked to oxidative stress protection and cardio-vascular health. Herbs include rosemary effective for age related memory and mental function; hops for relaxation; and lemon balm for upset stomachs. You can even forage in your garden for chicory or salads.

chelsea_2-websiteThe AkzoNobel Honeysuckle Blue Garden, designed by Claudy Jongstra, part of the Farm of the World initiative, celebrates traditional use of plants to dye fabrics. Knowledge and appreciation of natural dyes are disappearing, this garden showed off the plants and the subtlety and beauty of their produce to great effect.

RHS Chelsea provided plenty of inspiration for even the smallest balcony, and a reminder that if we crowd out nature and green space, we undermine our own prosperity and well-being.  On that note, I am off to the garden centre to buy some pollinator friendly plants to create a wild fence to absorb the Euro 2016 chants bouncing down the street!

Image credits: St John’s Hospice, Claudy Jongstra

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What are our pension savings funding?

CigmTBXXEAA25dOThough we may not realize it, all those of us who are savers are stakeholders in the financial system, and should be able to find out where and how our money is being invested. However, it can be complex to map the chain of relationships between us as savers and what our money actually funds.

I was part of the ShareAction Pension Power team that visited the Department of Work & Pensions (DWP). We had a simple message for the officials that met with us: the government should take steps to improve transparency in the pensions industry. Simply put, we want the people that manage our retirement savings (pension providers) to communicate clearly with members like us, and be open about the investments they make our behalf.

A meeting with government officials might seem a little daunting, but we were accompanied by ShareAction staff and armed with some home truths. We were sure our personal stories of engaging with pension providers would drive home the arguments we wanted to make.

A key point was related to democracy. The majority of us save for retirement via our workplace. Employers pick the pension provider that suits them and, unless we opt out and don’t save at all, we’re stuck with that provider, for a long, long time. It seems sensible then, that we should get a say in how our pension scheme operates.

In particular, we should have the ability to hold key decision-makers to account. These people manage and invest trillions of pounds of our savings. With great power comes great responsibility. Or at least it should do which is why we told the officials at the DWP that pension savers need formal opportunities to find out what those decision-makers are up to and if they’re doing a good job.

What do these formal opportunities look like? We pointed out how some pension providers are already stepping up in this area. Some are organising annual members’ meetings to update savers face-to-face. Others appoint people to their boards who are selected by the members themselves. So the saver’s voice gets right to the heart of the action. These are tangible steps towards a democratic pensions system.

To truly work out if the people managing our savings are looking after our long-term interests, we need information as well. That’s why we stressed that the government should also concentrate on promoting transparency. Pension providers own large shares in the biggest companies in the world. But what are they doing with these holdings? Are they meeting with company bosses to encourage good governance that promotes long-term value? Are they using their right to vote on key company decisions, including environmental and social issues that have a material financial impact? They should be. We made it clear in the meeting that savers deserve to know this information about their pension provider’s action.

The DWP officials seemed impressed by our knowledge, and our personal stories had a real impact on their team. They said they wanted to hear more savers’ stories and case studies to paint a clearer picture of how their policies work on the ground.

We also had some time to hear about the government’s priorities for the coming years. Not surprisingly, they are focusing on auto-enrolment and providing value-for-money for savers.  With so many new pension savers entering the system, there’s a huge opportunity to use policy to improve consumer outcomes and choice. Increased transparency will be vital in making the most of this opportunity.

Better pensions policy for savers won’t happen overnight. We have high hopes that the meeting was the start of a sustained relationship with the DWP. But for now, we are glad that we had the opportunity to take the voice of savers to heart of government!


Related links:

The post first appeared on the ShareAction blog:

Show us the money (or at least where it goes): talking transparency in pensions with the DWP

How do we value nature?

FullSizeRender“Does nature come with a price tag?” asked the Earthwatch Spring Debate, deliberately provocative for an audience committed to conserving it.  Tom Heap, presenter of the BBC’s immensely popular, Countryfile, attributes the programme’s success to our hankering “after the real and natural”.  We are drawn to nature, we depend on it, thrive in it and yet, as Tony Juniper’s opening remarks reminded us, all indicators of nature’s health are pointing in the wrong direction. After thirty years of environmental campaigning, Juniper argues that putting a monetary value on nature help make the case for conservation with decision-makers. Otherwise, nature is cast as an impediment to economic growth and George Osborne promises ensure “things like Habitats aren’t placing ridiculous costs on British businesses.”

Georgina Mace, Professor of Biodiversity and Ecosystems, Head of the Centre for Biodiversity and Environment Research at University College London, and member of the Natural Capital Committee (though not speaking on their behalf) explained that in the past supply of natural capital was much greater than demand.  Today, negative impacts in one locality can no longer be offset elsewhere.  We cannot expect stocks to recover in the future, and resource constraints are starting to bind.  Scarcity of nature, as with all things, requires choices, which imply priorities, and, Mace argues, make valuation imperative.  It is not a matter of whether to value nature, or the services that it provides us, but, how to value it, in order to justify and generate funds for its restoration, protection and enhancement.

Mace distinguished between price and value.  Prices can be distorted, are subject to fashion (witness the rise of kale), focus on one aspect of value, and depend on the flow, not the stock of something.  Natural capital is our planet’s stock of natural assets including geology, soil, air, water and all living things.  The flow of benefits, or ecosystem services, is a function of the stock’s condition.  Revealing the value of these ecosystem services can tip cost-benefit analyses in nature’s favour. For example, degradation of upland peat bogs through burning, drainage, or removal of peat for fuel damages their ecosystem service provision.  A five-year project by South West Water, and its partners, to restore the peat bogs of Exmoor is demonstrating significant benefits through water and carbon storage, improved water quality and mitigation of downstream flooding.

The final speaker for the motion, Mark Huxham, Director of Academic Strategy at Edinburgh Napier University, the founding director of the charity ACES (The Association for Coastal Ecosystem Services) talked about the Mikoko Pamoja initiative (‘Mangroves Together’ in Kiswahili) in Kenya.  Mangroves provide biologically diverse marine habitats, protection from storms and coastal erosions, vital fish nurseries, and are among the most efficient natural carbon sinks.  The project in Kenya uses the mangroves’ ability to store carbon to deliver payments for ecosystem services (carbon credits) that fund conservation and community projects. Sustainable livelihoods are a key part of the puzzle, with well-managed ecosystem services one way to deliver value to those who so intimately rely on nature.

Miles King, CEO of People Need Nature, opened for the opposition asserting that the value of nature is far greater than the sum of its parts. Mike Hannis, Research Fellow in Environmental Ethics at Bath Spa University, observed natural capital accounting fails to capture the complexity and unpredictability of nature’s system-dynamics. What is more, the cultural value of nature is subjective. As Mace accepted attempts to value the intangible benefits of nature for aesthetic, inspiration and spiritual purposes are “at best compromised, at worst terrible”.

Sian Sullivan, Professor of Environment and Culture at Bath Spa University, echoed her colleagues’ criticism of flawed financial markets framing nature as a liability. Sullivan, described a pattern of capital moving in and striping away the natural assets in Namibia: first whaling, then guano and diamonds. Sullivan spoke of the Yasuni-ITT Initiative, where Ecuador’s government promised not to drill for oil in the national park in exchange for international. While figures were forthcoming, funds were not, and the initiative failed. Market preferences, Sullivan observes, have been to not pay.

Both teams agreed that power and wealth distribution are intrinsically linked to sustainable development and the fate of nature, as the tale of rising farmer suicides, water shortages and corrupt water management in a recent Financial Times article.

My heart empathized with Team King, though my head supported the pragmatism of Team Juniper.  The choice was between how we would like the world to be, and how it is. As Mace said “If we treat nature of infinite value, or of no value, then it gets trashed”. The audience seemed swayed.

Screen Shot 2016-05-14 at 12.46.40While we chuckle at cartoon Sullivan shared from the New Yorker, take a moment to reflect that through our pensions, savings, and ISAs we are the very shareholders lampooned. Global financial systems are dynamic. Some major players such as the Financial Stability Board, the G20’s Green Finance Study Group are studying environmental and social risk and long-term value. Oxford’s Smith School of the Enterprise and the Environment runs programmes so environmental NGOs can advocate for financial systems that deliver better environmental outcomes. As an individual ask your IFA, or pension provider about the environmental and social impact of your savings. If we engage with the system we can challenge the out of date assumption that short-term shareholder maximization is in our best interests.

A video of the full debate is available here.

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The Financial System We Need

IMG_0295“Practical action needs to follow political will shown at COP21”, the rallying cry reverberated around Mansion House at the co-launch of the City of London’ Green Finance Initiative and the UNEP Inquiry’s report, The Financial System We Need. Issuers, investors and regulators increasingly recognize that sustainability is a strategic and material consideration, not a moral or ethical optional extra. The UNEP report describes a “quiet revolution” of over 100 policy measures across 40 countries, to integrate sustainable development and finance. Under China’s Presidency of the G20, the People’s Bank of China and the Bank of England will co-chair a Green Finance Study Group, with UNEP acting as secretariat.

Just last month, the Financial Stability Board (FSB) set up the Task Force on Climate-related Financial Disclosures (TCFD), chaired by Michael Bloomberg.  The task force aims to deliver specific recommendations for voluntary disclosure principles. Speaking at the event, Andrew Bailey, Deputy Governor of the Bank of England, described the risk of future permanent impairment in value of assets and insurance liabilities. Clear, reliable and comparable disclosure from companies will enable investors to better identify and quantify stranded assets, and total ‘value at risk’.  As Elizabeth Corley, CEO, Allianz Global Investors, noted consistent disclosure requirements will reveal those companies that are best-in-class, enabling them to attract more capital, at a lower cost.

It is not just about risk, the amount of investment needed in green infrastructure is staggering, no matter whose statistics you read. The International Energy Agency estimates that meeting global energy demand by 2035 will need US$48 trillion of investment, with total spending on renewables and energy efficiency respectively of US$6 trillion and US$8 trillion by 2035.  The opportunities extend beyond bow-carbon, nature-based solutions can make our cities more resilient and liveable.  Writing from Davos, Mark Tercek, president and CEO of the Nature Conservancy, describes two pilot projects using green infrastructure to reduce the speed and pollution content of stormwater and improve air quality.  The Green Infrastructure Taskforce report, Natural Capital: Investing in a Green Infrastructure for a Future City makes the case for planning, managing and funding our own natural capital city.

There is increasing appetite for sustainable finance. The UN Principles for Responsible Investment have attracted signatories with more than US$59 trillion in assets under management. 120 investors representing $10 trillion in assets have committed to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis under the Montreal Carbon Pledge.

Opportunities extend beyond low carbon investments, Ma Jun, Chief Economist of the People’s Bank of China, described the environmental imperatives facing China of poor air quality, high levels of contaminated land and water pollution. Global Water Intelligence (GWI) estimate that US$1 trillion investment is need globally for water infrastructure and water preservation by 2022. Ma Jun says China is looking to the private sector to finance 85% of these investments in remediation.

The City of London Corporation and the Government are keen to seize this market opportunity, hence the Green Finance Initiative. Harriet Baldwin, Economic Secretary is right to champion the City of London’s track record in innovation and ingenuity, as Nick Robins, co-director of the UNEP Inquiry and co-author of the report said, “It is striking just how many key global initiatives are clustered in London – whether on responsible investment, green bonds, unburnable carbon, sustainable banking, climate disclosure or insurance risk”.

So where are the bottlenecks? As a former fund manager, Baldwin, knows investors like simplicity and returns, to that end, she highlighted the need “repeatable and scalable processes”, to unlock the flow of projects generating liquid and observable investment opportunities. Baldwin was less vocal about the need for clear, consistent policies to support low-carbon infrastructure in the UK, as her Cabinet colleague Amber Rudd continues to face criticism and tensions with the CBI escalate.

Comparable and credible accreditation standards are vital to build confidence in green or sustainable products. Overlaying environmental, social and governance data on top of existing performance metrics to understand how sustainability effects companies’ financial and commercial health is complex. While some investors such as, Allianz GI and Aviva, have been integrating environmental, social and governance into their analysis and investment decisions for several years, others have dragged their heels. Now, fiduciary duty, long-term returns and ESG are converging. Research, such as the meta-study by Arabesque Partners, shows good quality stewardship is a source of added value. This week, MEPs voted in favour of mandating consideration of environmental risks in pension schemes’ investment processes.

Steve Waygood, Chief Responsible Investment Officer, Aviva Investors, called for integration of ESG considerations across the financial supply chain, including credit rating agencies.  He suggested using benchmarks linked to the Sustainable Development Goals, with a consumer-friendly dashboard accessible for all. Such a democratization of information would raise awareness and engagement of the ultimate beneficiaries, pension savers.  Savers and investors would be able to see the impact of their portfolio on issues they care about, from deforestation to child labour. Responsible investment has in the past been bound by a limited choice of what to avoid, rather than a positive selection. If consumer choice is to be a driver of change in the savings market, new communication approaches are needed that make climate information easily accessible, comparable and relevant, particularly to young savers, Green Alliance.  Attending the event as a guest of ShareAction, I could not agree more.  So it is exciting to learn that Morningstar will release ESG ratings for a large proportion of the 200,000 funds it tracks in the coming weeks.

Georg Kell, vice chairman of Arabesque Partners, has said “the consumer is the sleeping giant”. Awaken the giant, show them the impact of their choices, and you might just find a client pool confident to invest for the long term.

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Growing well

IMG_0207I did not grow up in the City.  As long as I have lived here, I have sought out green space as a salve for my mental state.  A distant horizon and open sky allow my eyes to relax and my mind to expand.

As a recent move to a more urban home loomed, I wrestled to keep my mind open about the experience.  I wasn’t prepared for how quickly I would feel claustrophobic, and fraught.  On our first weekend, I frog-marched the family to a local garden centre to inject some green into the grey patio.  After a couple of days the bright blooms had attracted bees, but my sensibilities were not as easily placated. Two stops on the Overground, and I could breath in a glorious Autumn day as I ran around Hampstead Heath.  It is a remarkable natural resource that I am fortunate to live close to.

With urban populations swelling, green spaces in and around our cities are increasingly valuable for our health, wellbeing, climate change resilience, and recreation.  The value of natural capital close to cities is widely recognised.  The recent Aldersgate Group report, Investing in our Natural Assets highlighted the link between public health and natural capital, not least because of strained NHS budgets.  Natural England has estimated that if every household in England had equitable access to good quality green space, then £2.1bn could be saved in averted health costs.  Time spent in nature or urban green spaces can produce better outcomes for patient rehabilitation.  The NHS Forest project is focused on improving “the health and wellbeing of staff, patients and communities through increasing access to green space on or near to NHS land”.

As well as space to exercise, exposure to green areas helps reduce blood pressure, reduces stress and muscular tension. MIND’s report ‘Feel Better Outside, Feel Better Inside’ evidenced the positive impact on mental and physical well-being of gardening based activities and horticultural therapy. “Ecotherapy initiatives have the potential to improve health and wellbeing for individuals and to significantly reduce public health costs by encouraging healthier communities”.

However last year a UCL report, Natural Solutions to Tackling Health Inequalities highlighted the large variations in the number of people using green space for health and exercise by local authority. The report noted, “There are clear inequalities in access and use of natural environments. People living in the most deprived areas are 10 times less likely to live in the greenest areas. Indeed the most affluent 20% of wards in England have 5 times the amount of parks or general green space than the most deprived 10% of wards”.  Planning authorities must embed quality green infrastructure in their development plans, as income-related inequality in health is moderated by exposure to green space.

We need to make good use of green space in our cities, one inspiring example is the Hammersmith Community Gardens Association (HCGA), a local environmental charity that manages several community gardens sites in West London. From conservation training schemes, volunteer gardening sessions, health and wellbeing projects, environmental play schemes and education, there is an ingenious mix of people and projects delivered by a passionate team, that Karen Liebreich, guerrilla gardener and trustee, had invited me to visit.

IMG_0160As we arrived at Ravenscourt Park glasshouse, Zoe Lyall, School and Community Gardener was chatting with two spritely seventy-something volunteers for the afternoon’s Grow Well session, therapeutic gardening for carers. Even on a bitter winter’s day the greenhouse was lush, and inviting. Grow Well complements, the NHS funded Plant a Seed which trains NHS staff to develop therapeutic gardening and food growing projects within their own setting. Nearby in White City, HCGA is a partner managing the Phoenix School Farm and Learning Zone, where Cath Knight co-ordinates the one acre site growing vegetables for the Phoenix, other schools, and now the Salt Yard tapas restaurant. The Get Out There! project offers local unemployed people the opportunity to learn new skills in basic environmental management. Keith Bittan, a graduate of Get Out There is now working for the related social enterprise, Cultivate London. Keep your eyes peeled for Cultivate London’s plants at a London Farmers’ Market in the spring.

So, if the Festive cheer is overwhelming, wrap up and walk out the door for a breath of fresh air.  Feel the wind on your face, hear the birds, smell the damp soil and cherish the simplest of pleasures in the holiday season. Oh, and may be see if there is a moribund bit of space that you could nurture back to green nearby?

Related links:



Int. J. Environ. Res. Public Health (2015) Green Infrastructure, Ecosystem Services, and Human Health.

Natural England (2009) Our Natural Health Service: The role of the natural environment in maintaining healthy lives.

Growing for Health’s report on ‘The Benefits of Gardening and Food Growing for Health and Wellbeing


Is CSR dead? Long live CSR (and Shared Value)! #BarclaysDebate

CQv4qacWIAAmh7kThe Barclays Debate, chaired by Matthew Tayor, Chief Executive of the RSA, pitched John Elkington, Founding Partner and Executive Chairman of Volans, originator of the “Triple Bottom Line” against Mark Kramer, CEO of nonprofit consulting firm FSG, and co-author of “Creating Shared Value” with Michael Porter to discuss, “Is CSR dead?”.

A virtual poll of the audience revealed the split was fairly even at the start of the evening.  I was for #TeamMark, surely corporate social responsibility of old has quietly passed on to more productive pastures?  CSR teams as an outpost of corporate affairs, staffed with communications professionals, set CSR firmly outside of core business operations.  As such, many totemic activities were scythed in cost-cutting exercises during the economic downturn.

Mark Kramer framed the debate as the choice between the responsibility of “doing less harm” and the strategic opportunity of generating economic value in a way that also produces value for society by addressing its challenges”.  Kramer honed in on the role, and definition of profit, “I think John believes we need to reinvent the model to take into account things that have no monetary value – the use of natural resources, the welfare of people – so that we can present them to companies as a bottom line that frankly is fictitious.” Externalities are out of the equation.  Companies respond to reality, the real incentives of the bottom line, government policy and the regulatory framework context.

IMG_0038 (1)The “Triple Bottom Line” accounting framework with three parts: social, environmental (or ecological) and financial, or people, planet, profit, was coined by Elkington in 1994.  Acknowledging the complexities of valuation, the framework has been a powerful tool to reveal the full cost benefit analysis of doing business.  However, the framework separates people and planet from profit, perhaps reinforcing the sense that CSR sits apart from core operations.  With his opening comments, Elkington expanded this narrow frame of reference, and influence, from within to without an organisation: “CSR is a deep rooted, ongoing conversation across sectors about the role of business in society. It is about transparency, accountability and sustainability.”  Shared value, Elkington counters, may provide limited win-wins, but will not deliver the breakthrough capitalism we need, described in his latest of 19 books, “The Breakthrough Challenge: 10 Ways to Connect Today’s Profits with Tomorrow’s Bottom Line”, co-authored with Jochen Zeitz, and central to the B Corps movement that launched in the UK last month.

Elkington did question whether CSR is fit for this greater goal of systemic change.  As the mutual dependency of people, planet, profit is increasingly recognised by the mainstream, so CSR is facing serious problems.  Resource scarcity has risen up the business risk agenda, so activities that may have been within the CSR remit, are now considered part of core business, but the question of intention remains.  Citing that day’s news of John West’s woeful performance on sustainable fishing, Elkington said, “John West promised to get to 100% pole and line caught tuna by 2017 – it’s currently at 2%. Does that completely wipe out CSR? Absolutely not. It means John West are semi-criminal”.  John West and the VW emissions scandal are examples of an absence of integrity and values.

Janet Voute, Global Head of Public Affairs, Nestle, in her opening remarks as #TeamMark seconder, quoted Nestle’s CEO as saying the corporate sector has had a values crisis.  At Nestle there is no ‘Shared Value’ department, rather Voute asserts the values of Nestle are aligned across the organisation with the Ten Principles of the UN Global Compact, looking to create shared value, and value for shareholders, over the long-term.  The time horizon is a vital disclaimer, echoing Kramer’s caution that companies short-term incentives may conflict with shared value. The externalities of environmental, social and governance factors getting squeezed out by short-term profit and pay incentives.

A quick show of hands revealed most of the audience agreed that capitalism itself needs a serious health-check.  Patrick Thomas, Chairman of Board of Management of Covestro, joining the debate as #TeamJohn seconder, was fresh from meetings with fund managers: were they won over by Covestro’s products or their commitment to the triple bottom framework? Hermes Investment Managers latest paper on Responsible Capitalism and our Society finds that while awareness of environmental, social and governance (ESG) issues amongst institutional investors is growing, it is not being reflected in decision-making. Saker Nusseibeh, Chief Executive of Hermes Investment Management, said “Today’s siloed and short-term investment approach is the antithesis of responsible capitalism. Change is necessary, if we are to ensure today’s savers and their children will be able to enjoy a fruitful world in the future”.

IMG_6226Finally, as a coalition of 19 investors with over £625 billion in assets under management has written to 11 major automobile companies calling for improved reporting of their public policy interventions on emissions standards, we need greater transparency of the relationships between business, regulators and policymakers.  The air quality in our cities is testament to the current system failure.

#TeamJohn won the vote, but the consensus in the room was that rather than either CSR or CSV,  we need both.  A revitalised CSR agenda to build momentum for systemic change, and shared value to reconnects businesses and all their stakeholders. A panellist at a Harvard Kennedy School Leadership dialogue in 2007, said “CSR is dead! Long live CSR.”  In eight years hence, I hope we have met the breakthrough challenge.

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Click to access report_17_EO%20Framing%20Paper%20Final.pdf



Celebrating the Inglorious at Designs of the Year 2015

inglourious_fruits3To whet my appetite for this year’s London Design Festival, I headed to the Design Museum to see see the Designs of the Year 2015.  This year’s awards focus on designs that deliver change, enable access, reflect current trends, and extend the boundaries of design practice.  Sustainability, and consideration of environmental impacts, is rising up designer’s priority list: it is not just about product form, but also life-cycle function.  Designing for the Sixth Extinction, by Alexandra Daisy Ginsberg for the Science Gallery, Dublin, set an apocalyptic tone exploring how synthetic biology could replace natural species or protect against pollution, disease and biodiversity loss.

After the sombre start, Inglorious Fruits could not fail to crack a smile.  To reduce annual food waste of 300 million tonnes (57% of which is due solely to appearance), Intermarché, the 3rd largest supermarket chain in France, decided to sell imperfect fruit and vegetables at a 30% discount.  The ‘Inglorious Fruits and Vegetables’ campaign, designed by Marcel, reached 21 million people in a month creating a new business line for Intermarché, providing the customer with the same quality food for less and paying growers for produce previously wasted.  A welcome nudge that reminds beauty is found within.

One effective way to create positive behaviour change is to capture young hearts and minds.  To that end, some inspiring educational projects are among the nominees.  ext001_aerial_©xia zhiThe Garden School, designed by OPEN Architecture, for the Changyang Government, Fangshan District, Beijing, aims to become the first triple green star rated school in China.  The architects designed multiple levels above and below ground in a branch-like shapes creating undulating landscapes that allow more light into classrooms, and open spaces.  The roof of the upper building is an organic farm, with each of 36 classes having their own plot.

320 million people on the African continent lack access to clean drinking water, and yet the majority live in regions where it rains more than 600mm per annum.  Waterbank Campus at Endana Secondary School in Kenya, designed by PITCHAfrica for the Annenburg Foundation, is a working model for rain-harvesting school for semi-arid regions.    Seven ‘Waterbank’ buildings are designed to harvest, store and filter high volumes of water using low-cost materials to provide drinking water and irrigation.  Four acres, of the ten acre site, are devoted to irrigated conservation farming. At the centre of the campus is a rain-water harvesting football and volleyball stadium, with the aspiration that football will be catalyst for environmental education, and reduced ethnic tension.  The school may even make use of the BRCK, a robust, portable, mobile WiFi device developed by Ushahidi, in Nairobi.  Cloud-managed, the BRCK will automatically search and reset to a stronger signal, and the eight-hour battery life means a steady connection even when there is a power surge or cut.  With an built-in global SIM the BRCK could be deployed in disaster response situations.

With a throw back to the beginnings of Carefully Curated, Marjan van Aubel (a 2013 nominee with James Shaw for the Well-Proven Stool) has again been nominated this year for her Current Table designed with Solaronix.  The elegant table is made of glass-topped, copper-toned dye-sensitised solar cells (DSSC), an efficient form of photo-voltaic cells.  The dye absorbs light, even when diffuse indoors, and creates energy through photosynthesis.  The table has two USB charging points, and a battery to store the energy.  The only snag is whether the people round the table will be able to turn their attention from device to dinner.

Field Experiments Indonesia, a design collective exploring often overlooked aspects of sustainability, those of culture and authenticity.  Souvenirs are often ‘made in China’ and disconnected from the destination. I recently saw ‘Aboriginal’ Australian sculptures, made in China, for sale in a service station on the M6.  Field Experiments provides an antidote of more than 100 objects made by designers and traditional craftspeople sharing knowledge, culture and materials over a three month period in a nomadic studio in a farming community outside Ubud.

The drum-roll is reserved for Ocean Clean-Up, Digital Design of the Year Winner, and at the time of my visit, the runaway winner in the People’s Vote.  There are 5.25 trillion pieces of plastic trash in the world’s oceans, and each year, 8 million tons of plastic are added to the count, according to a report from the Ocean Conservancy.  This bold project is leveraging the power of digital communications to gather funding and know-how for large scale clean-up projects of our seas. Ocean Clean-Up’s feasibility work suggests using a single 100 km cleanup array, deployed for 10 years, will passively remove 42% of the great pacific garbage patch.  As tabloids predict chaos at the arrival of a 5p charge for single-use plastic bags in England, perhaps this long overdue nudge will prompt people to realise there is no away in ‘throw-away’.

And finally, my personal post script, the Double O bicycle light, designed by Paul Cocksedge, solves a personal pain-point.  The two lights snap together magnetically and the circular hole in their middle means you can slip them on to a D-lock. The LED light is designed not to dazzle other road users too. Simple, and safe.

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The Great Acceleration and the race for a new deal for nature

Screen Shot 2015-08-11 at 10.56.37The latest issue of the Green Alliance’s publication Inside Track, “The Great Acceleration: What should the UK do to protect natural systems” opened with a powerful infographic illustrating the link between human activity and the structure and functioning of the Earth System.  The Great Acceleration refers to the massive increase in nearly every sphere of human activity since 1950: population; transport (particularly international travel); resource use (with rural to urban migration driving consumption); communication and so on, from low or virtually non-existent bases.  Across the globe, natural ecosystems have been converted to human-dominated landscapes (1) as we pushing back nature and sublimate it to our wants.  The rate and scale of the change, is unprecedented, leading Professor Will Steffen to observe, “for the first time in human history, our own planetary life support system is being destabilised at a rapid rate and at a global scale.”

Each graph is startling, together the visual impact is even greater.  While there is the possibility of a legally-binding and universal climate agreement in Paris, the graphs remind us that carbon is one facet of a complex system.  Climate change is a massive, global challenge, but one that is simple to articulate: reduce aggregate emissions by switching to low carbon energy to limit global warming to two degrees.  For the natural environment locality matters: managing impacts on soil, water, air, nutrient cycles and biodiversity requires managing competing interests across sectors, and state boundaries.

Nature is the foundation of our production system, vital to our present well-being, and future prosperity.  Of the proposed 17 Sustainable Development Goals, more than half are directly linked to the conservation of natural resources.  Yet nature’s services are often missing from financial and economic analysis because they are delivered for free, and mistakenly assumed to have no value.  Ignoring these ‘externalities’ actually leads to outcomes that are less economically efficient, and short-sighted.

51MeUzEvTLL._SX333_BO1,204,203,200_Discussing, his latest book, “Natural Capital – Valuing the Planet”, Dieter Helm, chair of the Natural Capital Committee (the independent advisory body advising the Government on the sustainable use of England’s natural capital), referred to the Brundtland Commission‘s definition of sustainable development that,”seeks to meet the needs and aspirations of the present without compromising the ability to meet those of the future“, as an anchor for the concept of maintaining our aggregate natural capital assets.

974f41f0-2062-11e5-aa5a-398b2169cf79.imgOur balance sheet is not being maintained, the 2011 National Ecosystem Assessment found that over 30% of the services provided by our natural environment are in decline.  In the same week, I heard Helm speak, the shortlist for the Prix Pictet, the global award in photography and sustainability, and Douglas Coupland’s piece, Trashed” (pictured left) on beauty, toxicity, and the deadly contents of our cleaning cupboard provided visual reminders of the consequence of our actions.  Images of dystopia often provoke a woeful, “what can be done”?

Refreshingly, Helm offers an answer.  Helm divides the assets given to us by nature, into two categories: those that are renewable, provided for free, in perpetuity, if maintained above a certain threshold, such as fish stocks; and those that are effectively non-renewable, such as fossil fuels.  The categorisation prioritises efforts on renewables that are struggling to regenerate, in the face of overfishing, for example. If non-renewables are consumed, then the economic rents should be reinvested in a sovereign wealth fund to provide other forms of natural capital for future generations, and so maintain the aggregate. Norway’s sovereign wealth fund, established in 1996, has assets of around $900bn, owned by a population of 5.5 million. In contrast, future UK generations will receive little benefit from the one-off, windfall boon of North Sea Oil.

Compensation payments for damage, central to property rights elsewhere, to pay for restoration, or replacement would reveal the true cost of controversial developments.  The use of green taxes and removal of perverse subsidies to price externalities, to ensure the polluter pays will change the incentives industry works towards.  A carbon tax is readily understood, so why not an equivalent for nitrates or pesticides? With a £9bn contribution to economic output, of which £3bn is direct subsidy, and additional subsidies, such as fuel, Helm “struggles to think of how [fiscal support for agriculture] could be worse”.  Helm is not criticising farmers, but the perverse incentives they work towards.

The aggregate natural capital approach offers growth, and improved economic efficiency without straining the public purse.  Policy makers, politicians, and businesses are well-versed in the costs of environmental measures, however a natural capital fund from economic rents, compensation payments, green taxes and the removal of perverse subsidies would dwarf amounts currently spent on nature.  Amber Rudd, secretary of state for energy, writing in the Sunday Times (09.08.15), set out the government’s shale gas policy, alongside commitments to create a shale sovereign wealth fund and compensation payments for communities around shale developments. Will we see the framework rippling through to other areas of government policy, particularly when environmental investments involve costs and benefits across departmental boundaries?

The Natural Capital Committee’s presented a series of compelling environmental investments that offer strong economic returns.  Green spaces in cities, provide physical and mental health benefits that would reduce health treatment costs (estimated £2.1 billion) and improve labour productivity.  Similarly, the benefits of woodland planting are magnified when they are located near towns and cities.
Companies, responsible for much natural capital, are increasingly aware of the business risks from its degradation.  A report in the Financial Times noted, “Water scarcity is starting to hit the balance sheets of multinationals, who have spent more than $84bn managing their water usage in the last three years.” Businesses have a key role to play in integrated plans. NEF’s (New Economics Foundation) recent report, Blue New Dealexplores the symbiotic relationships between sustainable fisheries and tourism, “Acknowledging the multiple benefits of protecting and better managing the natural environment can help deliver conservation measures more effectively and build more cohesive communities”.   
Nature and economic development are not conflicting interests.  They may compete in a particular location but there are new, pragmatic approaches emerging that offer great opportunity, and better alternatives.  The detail is undoubtably challenging, but the vision is one where we collaborate as stewards for nature, acting in our own, enlightened, best-interests.  To quote Helm’s thoughts on the vex question of the development on the Green Belt, “imagine a Green belt with lots of natural capital, a much more environmentally benign agriculture, much greater public access, woodlands located next to people so it could fulfil not only the original purpose of limiting the sprawl but also provide the lungs of the cities, the fresh air for children to play in, and the recreational benefits which are crucial to health and well being.”
  1. MEA (Millennium Ecosystem Assessment) (2005Ecosystems and human well-being:synthesis (Island PressWashington, DC)
  2. Hibbard  K. A.Crutzen  P. J.Lambin  E. F.Liverman  D.Mantua  N. J.McNeill  J. R.Messerli  B.Steffen  W. (2006) in Integrated history and future of people on EarthDecadal interactions of humans and the environment, eds Costanza  R.Graumlich  L.Steffen  W. (MIT PressBoston, MA), pp 341375Dahlem Workshop Report 96.

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