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8 November 2017

Prince Charles and the green investment conundrum

One of the more intriguing revelations from the 'Paradise Papers' – a leak of documents relating to offshore tax schemes – is that the Duchy of Cornwall, Prince Charles's private estate, had invested in Sustainable Forestry Ltd  which lobbied politicians to amend global agreements to allow the trading of carbon credits from rainforests.

Eyebrows were raised at this revelation as the prince has also made speeches in support of such a change. The Duchy says the prince has no direct involvement in investment decisions, but, if he wasn't aware of the company's position on this, the co-incidence is remarkable.

The Prince is not alone, Al Gore has been attacked for both having investments in green technology (by the right wing climate change denial movement) and for having investments in other technologies (from the hard left). He can't win: if he invests in green then he has a vested interest; if not, he's a hypocrite.

While my investments in green energy schemes are decidedly small beer (understatement klaxon!) compared to the fortunes of the prince and Mr Gore, I decided that I'd rather use my limited spending power in the pursuit of a sustainable future than worry about perceived conflicts of interest. If I saved for my future through 'business as usual' investments, then I'd be helping sustain business as usual. That's a no brainer.

Where Prince Charles has fallen down is not declaring, or possibly being unaware of, a conflict of interest in a specific policy intervention. This is a basic transparency principle for politicians and it should apply to royalty as well.



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16 December 2016

Embedding Sustainability into Capital Investment Decisions

live-theatre-mastermindLast Friday saw the final Corporate Sustainability Mastermind Group meeting of 2016. We met at the wonderful Live Theatre in Newcastle and had a great lunch at the Theatre's Caffe Vivo.

The subject of the meeting 'Embedding Sustainability in Capital Investment Decisions' - a recurring topic when we discuss other issues. We got so many great insights it was very difficult to boil them down to just twelve for a blog post, but here goes:

  • Use bureaucracy to your advantage – get Sustainability into the checklists and stage gates;
  • You don’t have to tag all sustainability projects as sustainability projects – if it’s needed, it’s needed, full stop;
  • Challenge the status quo and have a good business case prepared in advance;
  • Delegate the job of ‘policing’ decisions on Sustainability to others or you will become a pinch point;
  • Pick the big impact issues and let the small stuff go (80:20 rule);
  • Find the overlap between Sustainability requirements and company strategy;
  • Cosy up to key decision makers long before any decision is taken;
  • Understand the organisation’s financial rules inside out – they may be being applied in a way that unnecessarily prejudices against Sustainability;
  • Outcome based procurement allows potential suppliers to propose best way of fulfilling your needs;
  • Don’t consider anything with a negative impact on customer experience – it will almost certainly end in failure and rancour;
  • There’s always a focus on costs, but there’s nothing worse than reputational damage;
  • Make the case of the downside of less sustainable options/do nothing as well as the upsides of the sustainable options.

I've favoured the 'big strategic principles' in that list rather than the myriad of practical tactics which also arose. Alongside that were many company-specific ideas which we don't record as the Group operates under the Chatham House Rule.

If you are interested in the Mastermind Group then click here for more. The present group is based in the North of England, but we're investigating setting up a London branch in 2017, so if that interests you, please let me know as soon as possible.


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14 November 2016

Don't be depressed, invest!

piggybanksNo matter what your politics, it's hard to see a Donald Trump presidency being a boon for the fight against climate change in particular, and for Sustainability in general (although this less pessimistic view by Michael Liebreich is worth a read). As a big L Liberal myself, I find the whole global political shift to inward-looking petty nationalism and short-termism utterly, utterly depressing.

I ended last week under my duvet in the grip of not only despondency, but a bad dose of the dreaded manflu. Checking my e-mail on my mobile for anything urgent I needed to deal with before the weekend, an e-mail appeared from one of the crowd-investing platforms I subscribe to. They'd opened a new investment opportunity in a major solar project.

I jumped out of bed, went down to my office, checked out the offer document, and immediately made a modest investment. And, it made me feel really good. Really, really good.

Nothing beats being proactive when you feel you're up against the wall. And my investment in the future is not just a financial one, it's an emotional one too. I am buying into a low carbon future. Much better than marching with a placard.

Try it!*


* usual caveats: investments are risky, you could lose money, I'm not endorsing any particular investment etc.

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7 November 2016

The best quick wins in Sustainability...

breaking down sustainability barriers

For years, I've been calling for a massive hike in public investment in upgrading the UK's electricity grid rather than the usual investment in traditional instructor such as roads. Roads are roads, they've pretty much hit the top of the S-curve of innovation  (and simply generate more traffic), whereas upgrading the grid would not only create jobs, but it would trigger innovation and unlock new renewable energy and storage opportunities. Our current grid is designed for centralised electricity generation, not for the new Energy 2.0 distributed generation, so it is clearly a brake on the march of renewable energy. A new report by Policy Exchange has added some stats to this qualitative argument and it looks compelling.

Much of the friction in any change process comes not from the change itself, but because the existing supporting infrastructure and systems has been designed to support the status quo. In Sustainability, I often find that the best way to make the biggest impact with limited resources is to hunt down these pinch points and eliminate them with extreme prejudice. While sometimes this requires significant investment in new physical infrastructure, as with the grid, changing systems to remove barriers can often be done at negligible cost.

At one client we found that removing the bureaucracy around its teleconferencing system, which had been sat gathering dust, led to it being overloaded almost overnight. The client had to double its capacity to keep up. These kind of 'making sustainability the easier option' solutions can get momentum going very quickly indeed.

With another client, we found that the full cost of carbon to the business was not being factored into investment decisions. Tweaking the system to "reflect the true cost of each option more accurately" is a relatively easy argument to make and yet it will have massive impact into the future without further intervention.

So if you're going to start anywhere, start targeting barriers and pinch points. You'll find you can turn relatively small efforts into significant results – not to be sniffed at!


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12 October 2016

Squaring the Sustainability vs ROI circle

The latest edition of Ask Gareth considers the problem of making sure Sustainability benefits are considered fully in investment appraisals/decision making so it can stand up against 'return on investment' calculations – a critical issue if we are to move away from 'business as usual.'

Ask Gareth depends on a steady stream of killer sustainability/CSR questions, so please tell me what's bugging you about sustainability (click here) and I'll do my best to help.

You can see all previous editions here.


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14 September 2016

Embedding Sustainability is a Banker

Tax calculator and penFascinating article in this week's Economist, traditionally no friend of sustainability, about investing in low carbon firms. They quote research by BlackRock who found that companies in the top quintile for cutting their carbon intensity outperformed the MSCI World Index by 4% since 2012, while those in the bottom quintile trailed the Index by 5%.

On the downside, the author quotes other research which shows 'green mutual funds' trailed others  between 1991 and 2014. The blame for this is put on volatile fossil fuel markets and Government policies. My own (rather modest) green investments seem to have flat-lined over the last couple of years, deflating my enthusiasm slightly.

The article also mentions that the cost of LEDs has plummeted by 90% since 2010, showing how quickly green technologies are still maturing. It will be very interesting to see how this and similar price drops through economies of scale and innovation across the green tech sector will impact in the medium term.

The conclusion from all this is that while the green sector itself is still immature and thus risky, embedding sustainability into a conventional company will almost certainly reap dividends.


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4 July 2016

Accounting for Sustainability Properly

Tax calculator and penA client coaching session last week focussed on investment appraisal and how it can block sustainability progress – in this case investment in renewables. As we dug deeper and deeper into the company's systems, we realised that the process did not account for direct carbon costs as these were apportioned to a regulatory budget. Simply factoring this into the benefits of investing in renewables could change a difficult decision into a very simple one.

Total Cost Accounting is the concept of apportioning all costs, fixed and variable, to their proper place. This sounds obvious, but simply being aware of all the costs involved is a challenge in itself. This is where a coach comes in handy, as they (I!) can ask the apparently stupid questions which uncover uncomfortable truths hiding in plain sight.

My client now has the task of trying to change the criteria to factor in carbon costs. In theory this shouldn't be too difficult as it will lead to better decisions from a financial point of view as well as a sustainability aspect, but in practice, changing processes in a very large company is never easy. But once it is done, all low carbon options will compete on a level playing field on costs at least.

Of course there are many other benefits of renewables which should be factored in – PR, customer satisfaction, employee engagement, energy security, risk reduction – but getting the £, $, €, ¥ right is an important step in the right direction.


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30 July 2015

Sustainability in Portland, Oregon (Part III)

IMG_8473So I had my meeting with sustainability officials at the City Council of Portland, which is unlike any local Government I've come across before. It has only 6 elected officials – the Mayor, four commissioners and an auditor – for a city of half a million people. Apparently this means things can happen quickly – IF you have the attention of one of the first five.

My meeting wasn't on the record, so I must emphasise the following things I gleaned are my impressions rather than the express opinions of the Council officials (and I take full responsibility for any errors):

  • While the City now has an exemplary sustainability reputation, it wasn't always this way. It was sued by the federal Government in the 1970s over air quality standards.
  • The City has integrated sustainability into its city plan, but that plan doesn't mention sustainability – it is just embedded in there;
  • Renewable energy is not a big thing in Portland as Federal incentives are weak and electricity is dirt cheap (8c a unit). This explains the one weakness I've noticed in Portland compared to, say, Newcastle where I live, a lack of domestic solar;
  • Summer temperatures are definitely rising (it hit 36°C yesterday and may be warmer today) which has led to retrofitting of domestic air conditioning which is a big challenge;
  • The first move in the cycle network was to install cycle parking around the city. As local businesses saw more business coming their way from cyclists, they became open to the idea of more cycle infrastructure. There's now a waiting list from businesses for cycle parking;
  • The cycle greenways that form the wider network were very low cost – signs, speed bumps and the occasional cycle crossing. The idea is to divert drivers and create safety in numbers for cyclists by funnelling them along those routes;
  • The sustainable drainage swales I saw, are not just a trial – there's 1,000 of them across the city. In addition, every new development is responsible for dealing with 100% of stormwater on site. As a result, many buildings have green roofs and/or gardens to retain excess water;
  • While the hippy/alternative culture creates expectations, it can also cause resistance to, for example, a shift to more dense housing to avoid unlimited sprawl;
  • A key tactic is to compare the cost of 'sustainability infrastructure' with that of car infrastructure. For example a new major bridge is about to open for trams, light trains, cycles and pedestrians. If cars had been factored in, it would have tripled the costs.

I'd like to send a big thank you to everybody who helped with this visit – I've learnt a lot!


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10 November 2014

Putting my money where my mouth is...


I've just made a modest investment in Triodos Renewables via the TrillionFund. This follows a smaller peer-to-peer loan to another renewables project I made earlier in the summer. My reasons are:

  • I want to build an income stream in addition to my consultancy and invest for my and my family's medium to long term future;
  • I want to make that investment to be environmentally- and ethically-sound (or as sound as it reasonably could be);
  • I want to do my bit for the renewables industry;
  • If I don't invest in green energy, how can I expect anybody else to do so?
  • I now have some 'skin in the game'. As with anything I have a monetary stake in, I will now take a lot more rigorous and objective interest in the topic - it's no longer an academic subject to dip into as and when I feel like it.

This last point is very important for all of us. I often ask clients or potential clients the killer question "what's your budget?" and usually get some stammering in reply.

No budget = no commitment.

When Sir Stuart Rose created Plan A at Marks & Spencer he gave it £200 million to get going - and didn't expect to see a direct financial return on that investment. That is commitment.

Do you have skin in the game?


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20 July 2012

Are Investors Bothered About Sustainability?

I was sat in the foyer cafe of one of the most impressive corporate headquarters I have ever visited, formalising a business relationship with the company's Head of Sustainability. In the cavernous main foyer space groups of surprisingly young sharp suited men and women were being politely ushered between presentations on different aspects of the company's operations given by its top executives.

"It's investor day." explained my companion looking over at the suits, "This is one of the reasons we need to up our game - to keep these guys happy."

When I was writing The Green Executive two years ago, I considered including investor pressure in the business case for sustainability, but ultimately omitted it as none of the executives I interviewed for the book cited it as a driver. When I asked the question, I got equivocal answers. But times change, so is investor pressure now a compelling reason to take sustainability seriously?

Well, according to consultants PwC, increasingly so. In a report released earlier this year, they identified seven pieces of evidence pointing in this direction:

1. Sustainability shareholder resolutions gaining traction - more people are voting for them.

2. Steady growth in sustainable investment in the last 15 years.

3. Studies suggest positive relationships between sustainability and financial performance.

4. Financial institutions are forming sustainability research departments.

5. Entry of well-funded financial information providers into the sustainability information provision business.

6. New research shows that investors are keen to access sustainability data.

7. Growing interest among institutional investors.

So the conclusion seems to be investor interest is increasing rapidly and will soon start telling - suggesting that this is indeed one more reason to stay ahead of the curve on sustainability.


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12 September 2011

Greening the bean counters

I usually start off my seminars by asking delegates why their company should go green (try it - much more effective than you telling them why they should go green). The first answer is almost always "Save money" and, after compiling a list of other reasons, this is identified as the most important.

I always challenge that answer. The delegates have explained how customer pressure is a factor, yet they then discount this in favour of short term cost cutting - maybe it's the current economic climate to blame. I usually point out that, without customers, the bottom line is an irrelevance.

There is always more scope for increasing sales than cutting costs. This is an essential truth to get across to anyone doing investment appraisals of green projects - they need to factor the scope for raising the top line into their calculations, rather than just a simple return on investment (ROI) assessment.

Interestingly those who seek to raise the top line will cut costs into the bargain - Marks & Spencer's Plan A programme was never intended to save money - but it has. But if you take a penny pinching attitude and expect a direct ROI on projects, you will never back the ambitious ideas that will set you apart from the pack in the market - missing out on the big rewards of green business.

So, don't forget to get the bean counters greened up and aware of their importance in the Sustainability performance of the organisation.


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24 March 2010

What's a Green Investment Bank?

With today's UK Governmental budget expected to be all doom and gloom, one green diamond in the murk could be Mr Darling's well trailed Green Investment Bank. If you, like me, are wondering what such a bank might look like and operate, the Guardian has a useful compendium of opinions here. We shall have to wait and see what Mr Darling has in his red box...

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1 October 2009

Green jobs in a green economy?

There's an interesting article on Fast Company giving three estimations of the potential for new green jobs by 2020:

  • 2.7m in the EU according to Greenpeace and the European Renewable Energy Council (EREC)
  • 10m globally according to the Climate Group
  • 30m globally according to the Global Climate Network (actually 40m new jobs but 10m lost 'brown' jobs)

So plenty of jobs, even if the estimations vary widely. The latter two depend on China going green big time, which it claims it will do but there is a lack of clarity over how this will happen in practice.

There has always been a lot of confusion and blether about how to create green jobs. People build centres of excellence (can you create a centre of excellence?) and green business parks (most of which fail, but that's another story), but there is only one thing which will make a difference.


Renewable energy capacity in the UK surged 19% in 2008 and global renewables investment exceeded that in fossil fuels for the first time ever. Create that sort of demand and the supply and the jobs will follow. The rest, at best, will just facilitate change, not drive it.

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8 June 2009

Green Energy Investment Overtakes Fossil Fuels

In 2008 wind, solar and other clean technologies attracted $140bn (£85bn) compared with $110bn for gas and coal for electrical power generation (source: Guardian). There was a slight drop in investment at the start of 2009, but this is apparently recovering.

Given this background, it makes the decision by many 'big oil' companies to pull out of renewables an odd one. I'm sticking with my prediction that they will become the vacuum tube manufacturers of the 21st Century - the fossilised energy industry.

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2 July 2008

A good time to go green

Things have settled down here a little at Terra Infirma Towers after the most busy (and it has to be said lucrative) month in our history. I've said before that with companies feeling the pinch from falling orders and soaring oil prices, this is not a bad time to be offering cost-cutting services. The great thing about cutting material resource use, as opposed to human resources (hate that term), is that it doesn't cut your capacity to deliver products and/or services so as the economy recovers you're not floundering behind.

Of course companies can go beyond simply reducing environmental costs and start exploiting environmental business opportunities. Now you might think that this is a risky time to do so, but both the Guardian and the Times are reporting a surge in green investment and I hear the same from contacts in the banking industry.

Just don't think you can stick a green label on a duff product and expect it to succeed. Plenty have tried and failed. And I keep meeting more of them.

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29 February 2008

Clean Energy Investment Booms

New Energy Finance is reporting that "Clean" energy investment almost hit $150bn last year - up 60% on the year before.

Their press release states:

Among the key factors pushing this numbers sharply upwards in 2007 were government policies around the world to promote renewable power and cleaner fuels, oil prices approaching $100-a barrel and rising corporate and investor awareness of the opportunities in clean energy.

One of the themes of 2007 was geographic diversification. Western Europe and North America continued to enjoy sharp increases... but the momentum spread out to include other developed economic regions such as Eastern Europe and Australia.

Even more significant was the pick-up in activity in emerging economies, with China moving strongly ahead with projects in wind, biomass and energy efficiency, Brazil seeing huge investment interest in its sugar based ethanol sector, and Africa starting to see renewable energy and efficiency as partial answers to its power shortages.

Interesting stuff. Obviously the Low Carbon Economy is still in its infancy, but if investment continues to rise at this scale, markets will stabilise and the uptake of renewables and energy efficient technologies will start to become the norm, rather than the exception.

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