Environmental Social and Governance (ESG) funds have gained popularity, mainly driven by the Covid pandemic and a developing interest in localism, and their performance has become attractive. The trend is expected to continue with big established players now setting up their own ethical funds too. But with so many options out there, it can be difficult to know which one to choose especially as some funds use ‘greenwashing’ to portray themselves as sustainable but in fact are not.
To help demystify sustainable investments and see what’s available in Oxfordshire, we invited Ethex (an online ethical investment website) and the Low Carbon Hub (a social enterprise that is helping the community meet energy needs sustainably) to speak on the issue.
Rachel Mountain, the Head of marketing at Ethex, explained how Ethex helps people invest towards sustainable agriculture, transport, housing and energy. For instance, they helped Co Cars raise £665k during the pandemic to finance their electric bikes and cars on-demand shared mobility scheme and for which a 5% return is forecast on their withdrawal shares (also called community shares). This scheme which operates in the South West now includes 1,200 members and has achieved 30% reduction in car and 15% reduction in travel cost.
Rachel also gave a general outline of the various financial products types available on the market from pensions to current accounts and how we could change to a greener way of investing our money. On the topic of ‘greenwashing’, she explained how some financial institutions are labelling a product as ESG, even though they still invest heavily in oil and in socially negative practices, such as fast fashion. This is mainly due to the lack of transparency and regulation in the sector, one person's idea of ‘ethical’ may be completely different to others, which is what makes it all that little bit more confusing.
Rachel armed us with many tools that can be found on various websites to help us along the way such as The Ethical Consumer (ethicalconsumer.org), a research and campaign organisation which publishes information on the social, ethical and environmental behaviour of companies as well as guides to saving and investing. Good-with-money.com and banktrack.org provide useful information for current accounts and savings. On the pension front, Richard Curtis (film director of Love Actually) is leading a campaign for fund managers to switch to sustainable investments. His campaign is done via his tongue-in-cheek film Make My Money Matter and also the website of the same name makemymoneymatter.co.uk. With regards to funds and direct investments, Rachel pointed us to GoodWithMoney, The Ethical Consumer, the Big Exchange and 3D Investing (ethical funds).
As sustainability encompasses social equality, Rachel promoted a course called Own It which offers financial coaching to empower women and which was run by Friends of the Earth and Ethex.
Saskya Huggins, the Social Impact Director at The Low Carbon Hub (LCH) then spoke about how the LCH is working with schools across Oxfordshire by installing solar panels on their roofs to help them generate clean electricity and save the schools between 16-40% of their electricity needs. Their nearest project to Watlington is with Nettlebed School. To date, LCH has organised 47 energy installations on community and business buildings across Oxfordshire and which are estimated to have saved 1,259 tonnes of CO2 per year and power 1,465 houses. They also carry out energy audits and provide energy efficiency grants to communities and SMEs.
LCH’s new project is the Community Energy Fund which will build Ray Valley Solar, the largest community-run solar park just 3 miles from Bicester, and continue to develop roof-mounted solar PV arrays on buildings across Oxfordshire. This project has been so popular that they have decided to increase their funding target from £1.5m to £3m due to the high demand. Investment ranges from £100 to £100k and will attract a forecast 4-5% interest rate.
On the innovation side, Ray Valley Solar will become the key anchor for Project LEO (Local Energy Oxfordshire) and unlock the Innovate UK grant. This is a wide-ranging smart grid trial to accelerate the UK’s transition to a zero-carbon energy system, by demonstrating how a smart, local balanced energy system can bring social, economic and environmental benefits for everyone.
At the end of the talk, the audience had the opportunity to ask questions directly to Rachel and Saskya.
It is good to see that society is going in the right direction, and the Financial Times reported recently that Aviva, the largest Asset Manager in the UK, is preparing to fully divest from 30 oil, gas and mining companies. Let's hope we see lots more do the same!
The talk was recorded and is available to watch on the Watlington Climate Action website. Remember that this talk was not intended to provide financial advice but was aimed at making you aware of what is out there, and where to look.