Issues in Green Financial Services

Table of Contents

• CHAPTER 1 EXECUTIVE SUMMARY
  • Issues in Green Financial Services
  • Competitor Issues
• CHAPTER 2 ISSUES IN GREEN FINANCIAL SERVICES
  • How did ethical/green investments originate?
  • What is a "Green" financial services company"?
  • Who enforces the criteria for classification as a green company?
    • Many companies tend to use external consultants to identify companies with green credentials
    • EIRIS researches the social, environmental and ethical performance of some 2,800 companies across the world
  • How can financial services providers be more green?
    • Environmental performance is translated into monetary terms via the use of carbon footprint analysis
      • Companies can alleviate their carbon footprint by adopting carbon neutral practices in all areas of their business operation
      • All companies can work towards carbon neutrality by looking at office practices, as well as their overall business approach
      • Companies can also become greener by changing transportation methods, recycling & using different office materials
    • Emission-right trading has been cited as a green option but does nothing to mitigate the effects of climate change
    • Striving towards carbon neutrality will do more to bring the environment into balance
  • In Financial Services, ethical funds are becoming more popular, although some funds are classified as more "green" than others
    • Ethical/Green funds have grown in popularity over recent years
      • But this has caused some confusion as to the characteristics of a typical "green" fund
    • Ethical funds are subjected to a screening process for purposes of classification
    • Not many financial institutions use these criteria, as some have just begun to explore ethical/green investment offerings
  • What does a "green" customer want?
    • Green investors utilise a variety of positive criteria with regard to green investment
    • They also employ negative criteria, to avoid companies involved in areas such as tobacco or weapons production
  • Some traditional investment vehicles have also taken on green credentials
    • Environmental concerns have spread to additional products
  • What are the costs involved with being green?
    • The government-commissioned Stern Report advocates immediate action to combat climate change by outlining the costs involved with inactivity
    • Cost can also manifest itself in the shape of lower fund performance and there is some disparity of opinion regarding the performance of green/ethical funds
    • The possible emergence of green taxes may work to environmental investors' advantage
  • The future is positive for ethical financial services
• CHAPTER 3 COMPETITOR ISSUES
  • What is the potential for growth in ethical financial services?
    • Ethical investments are beginning to grow in popularity and the market for these funds is growing
    • Advice on ethical matters is increasingly sought after
  • Green credit cards are attracting customers
    • Greencard Visa incorporates a carbon offset program
    • Rabobank has formed a partnership with the WWF for its new Rabocard offering
    • Barclays has launched the world' s first carbon-neutral debit card
  • Green financial institutions are developing to provide a range of services
    • Green Bank: Triodos Bank is at the forefront of the ethical banking market
      • Triodos bank dedicate funds to a range of ethical projects
    • Green IFA: Barchester Green Investment
    • The UK Social Investment Forum (UKSIF) is a recognised membership network for SRI in the UK
      • The Retail Revolution programme represents UKSIF' s effort to help the ethical investment space grow
  • Green insurance focuses on offsetting the adverse effects of car and air travel
    • Climatesure claims to tackle climate change at no extra cost
    • Ecoinsurance is the Co-Operative' s first foray into green car insurance
  • Green fund investment remains the key focus for ethical financial services
    • Green Century Funds offer a variety of environmentally-responsible mutual funds
    • The Ethical Funds Company are the first to offer socially responsible mutual funds to Canadian clients
    • Henderson is one global investment firm that recognizes the potential of socially responsible investment
      • Industries of the Future Fund
    • Standard Life is one example of a leading UK assurance company offering ethical funds
    • The Old Mutual ethical fund is one of the top ten ethical fund performers in the UK market
    • Aberdeen is a top investment management company offering ethical fund propositions
  • Data
• CHAPTER 4 APPENDIX
  • SPP writing team
  • List of Tables
    • Table 1: Total SRI market value by country, split between core and broad strategies, as of December 31, 2005
    • Table 2: Typical weighting of different ethical issues in a Henderson Industries of the Future fund
  • List of Figures
    • Figure 1: Carbon neutrality represents a point of environmental equilibrium
    • Figure 2: Turning off computers saves energy, but computers themselves can also be recycled
    • Figure 3: Just one example of the way office materials such as ink cartridges can be recycled
    • Figure 4: The UK has the largest total SRI market value, followed by Belgium & the Netherlands
    • Figure 5: The new Greencard Visa offering
    • Figure 6: The Triodos Bank logo
    • Figure 7: Company logo for Barchester Green Investment
    • Figure 8: Phase 1 of the "Retail Revolution" seeks to promote ethical investment through co-coordinated events
    • Figure 9: Phase 2 of the "Retail Revolution" focuses on advisor guidelines and education
    • Figure 10: The Climatesure company logo
    • Figure 11: Issues surrounding health are given the biggest weighting in a Henderson Industries of the Future fund
    • Figure 12: Henderson company logo