Bethan Batiste wondered a year back if her savings could be better used.
The 23-year old says, “I have always been concerned about climate change.” “I have watched many YouTubers. That was the one that drove me to examine my finances.
Bethan works part-time in a shop in Guernsey, and doesn’t manage to save a great deal, but she has £1,000 put away for a rainy day, and she would like to know it’s not doing more harm than good.
She says, “I do not want to fund fossil fuels and big mining operations.”
People feel that climate change is urgently needed. Many are wondering if moving money could help.
Bethan found that investing sustainably is difficult. Although many investment and savings companies make huge claims about their climate-friendly products, it is often difficult to determine how much impact these products will have.
Lisa Stanley co-founded the website Good with Money. It provides advice to help ethical investors. The website claims it provides a clear guide to first-time investors like Bethan. It is funded through advertisements and a kitemark program.
“Step 1 is to examine your bank. Do you feel satisfied with its environmental record?” says Ms Stanley. Ms Stanley said, “In general I think products at main High Street banks will not be the most environmentally-friendly.”
Bethan could shift her £1,000 into a savings account at an ethical bank or building society, says Ms Stanley, or she could look for a climate-friendly investment fund.
These funds typically screen for problematic sectors such as tobacco or big energy.
Some funds, however, will be more proactive and lobby for climate-friendly strategies or invest in companies that have a positive effect on the environment.
- Consider putting your cash with a provider or bank that is focused on green issues if you prefer to keep it simple.
- You can take advantage of tax-free savings options such as ISAs. But, it is important to have a reserve – money that you can easily access if necessary.
- You should look for an investment fund that is climate friendly.
- You might consider a fund that is actively looking for stocks that support decarbonisation. For example, renewable energy. Or one that supports change in polluting industries. Impact investing is what you call it.
- Social media hot tips can make it difficult to choose your stocks. As with any investment, sustainable stocks come with risks.
- Find out where your pension has been invested
- Consider hiring an independent financial adviser if you have more money to invest.
Source: The Good with Money How to Invest Your First Time
In recent years there’s been a surge in sustainable investing due to increased awareness of environmental problems.
Additionally, as more governments are making clear their commitments in combating climate change investing in those companies has begun to make sense financially, according Ms Stanley.
It is not always clear what constitutes a green investment. Some funds, for example, give Tesla the top score due to its electric cars. Due to the company’s involvement with Bitcoin, and the environmental damage caused by its lithium mining that it uses in its batteries, others have placed it at the bottom of climate-friendly lists.
Bethan may choose to invest in a fund which does not focus on fossil fuels, even though it might still be investing in similar businesses.
She doesn’t think a fund such as that would be enough. She says, “I would prefer to know that the money is going towards a good cause than just trying to avoid the bad stuff.”
Louis Velati took this approach. He was involved in Friday climate strikes at school. He inherited money and decided to start researching green investments.
He says, “I am a little geeky so lockdown was an occasion to really dive into it.” MoneySavingExpert, a site that he found could assist him in understanding the new concepts.
Triodos is a Netherlands-based Bank with a strong emphasis on responsible investment. He chose it because it allowed him to both actively support and avoid harmful climate-friendly industries like wind power.
Louis states that “the impact investing funds were very thrilling.” It was easy to see exactly where the money was going. Your money feels very personal.
Bethan might also be able to select a fund promising to engage positively with businesses, and not just avoid polluting industries.
Engage means that the manager of the fund will advocate for climate change, and she will support shareholder motions to do so.
It is possible to avoid many of the dangers that sustainability investing could fall into by taking more active steps. ESG funds, which stand for Environmental, Social, Governance, have seen a huge increase in investment. They are a broad range of ethical concerns, from the rights and management of workers to environmental, social, and corporate governance.
ESG funds are seeing huge investments as there is a growing interest in responsible investing. But their climate impact may not be as great as it seems.
ReportInfluenceMap, an think tank, examined investments funds that used climate branding.
It was found that less than half the global funds made investments in climate change.
The report stated that money was not flowing to companies with an improving environmental record while funding for those that are deteriorating is still available.
Tariq Fay, BlackRock’s chief investor officer for sustainable investment, quit in frustration. ESG investing is “sustainable-babble”, which he called a waste of time. People think that they are dealing with climate change, but it’s not.
These problems, however, will eventually be solved, according to Ben Caldecott (Lombard Odier associate professor of sustainability finance at Oxford), because shifting financial flows are an integral part of decarbonization.
The financial sector must change rapidly to be a part of any solution. He says, “There is no transition without that.”
Indeed, the top agenda item at The Forum is how to mobilize Private Finance. COP26 meeting in GlasgowThe November meeting of world leaders, at which new strategies and commitments will be made to reduce carbon emissions, is taking place.
“If we’re going to address climate change, fossil fuel companies should pay higher interest rates so that it is harder for them raise funds.
Professor Caldecott says, “But it could also be that companies are committed to changing and want to access capital at a lower cost.”
We don’t want our money to go to companies that promise changes but never deliver. This is the most terrible outcome.
Green investing will be more efficient if there are standardised rules and definitions. Individual efforts can make a significant difference, but that does not mean they won’t be effective.
He recommends that you tell your bank why you’re leaving. Also, it’s important to examine your pension plan.
Caroline Hopper was four years old when she did exactly that. Surprised to discover that her pension had been invested in fossil fuels and tobacco.
She raised the matter with her boss and the company hired a financial adviser to assist staff in choosing new investments for their pensions.
Her memory recalls that she said “I personally stated I did not want my pension to be in fossil fuels.” “Now, it’s in technology and healthcare. A little impact investing is also done – companies that are clean and sustainable.
Richard Curtis is a filmmaker who has supported the campaign and encourages everyone to follow his lead.
Do you want to research for Let my money matterDavid Hayman (campaign director) said that reinvesting in your pension could make 21 times more carbon-emitting decisions than giving up flying or going vegetarian.
His words: “Your voice has an extraordinarily powerful effect.” While some individuals move their pensions wealth, it’s equally important to push for changes in your pension provider.
People should not see money as a scary, static investment in Swiss banks vaults, but rather as a secret superpower that can be used to create a better world.