British starling murmurations, like this one at the Newport wetlands nature reserve, are shrinking – an incentive for investing in ways that fight biodiversity loss that we can all appreciate
You might have heard a fair bit this year about green finance, sustainable investing, ethical pensions and so on, not least on the pages of this paper. These are all great ways for individuals to redirect the flow of capital invested around the global economy towards renewable energy and other carbon reduction solutions, waste management and any other corporate activity that is going to stop the planet frying more than it currently is.
This is all brilliant. It’s what we want. Capitalism has many answers to the problems it has in large part created and the pursuit of market solutions is vital. So are regulatory standards and policy pushes. That’s all happening. But capital markets don’t have all the answers and while having a sustainable pension, an Isa with a positive impact and a fossil fuel-free bank account are all 100 per cent worth doing, there will remain problems your money isn’t solving.
Biodiversity loss is one. No asset manager has yet found a convincing strategy that will both deliver a financial return to clients and stop the alarming decline in biodiversity loss around the world. If you’ve watched the murmurations of starlings in your local area in the past week or so and thought they seem smaller than usual, that’s a good example on your doorstep. How can a company monetise the protection of starlings?
Markets are innovative, but the truth is, some things are beyond them. The inability of market forces to come up with speedy and scalable solutions to all of the world’s problems is a key reason that Yan Swiderski, former investment manager, has co-founded the Global Returns Project, the sole initiative of the Climate Crisis Foundation.
It allows individual investors to allocate a small percentage of their overall wealth to not-for-profit organisations. A recent report from the Global Returns Project shows that giving £600 a year to climate not-for-profits is at least 100 times more effective than any other single action someone could take to reduce carbon. The portfolio of not-for-profits the project invests in consists of Ashden, ClientEarth, Global Canopy, Rainforest Trust UK, Trillion Trees and Whale and Dolphin Conservation. Each was included on the back of its effectiveness at protecting the natural world.
Yan suggests investors allocate just 0.25 per cent of their wealth to these organisations through the project. The returns may not be financial, but as Greg Davies, head of behavioural finance at Oxford Risk consultancy, suggested in a Mind & Money podcast: for real, non-financial returns, for money to really make you happy, the best thing to do is give it. You’ll feel richer, even if you aren’t.
Of course, there are limitations to this theory and it assumes you are not on the breadline or going into debt, say, in order to give and feel good about it. But if it’s manageable for you, if it’s something you could actually stretch to, because you are investing anyway.
Perhaps if sustainable investments haven’t yet struck you as enough action quickly enough, or not very authentic, then this might be another way you can make your money have a more immediate, direct, positive impact in places markets can’t touch. Like rainforest preservation, compiling lawsuits against polluting companies, or protecting dolphins.
There are also investments that look and feel more like charity, in community-scale projects rather than listed equities. A homelessness Community Investment Corporation – Greater Change – is raising on Ethex. The first municipal green bond from Islington council, Islington Greener Futures, is raising on Abundance Investment. For places to put your money that always do good, look to Triodos and Charity Bank.
But if you just want to give, there are thousands of charities desperate for help this Christmas. From Nourish food banks, to local churches, to National Energy Action, to Shelter.
There are many pieces to this puzzle and ethical and sustainable investing is huge and very, very necessary. But in all the talk of green finance and ESG, we mustn’t forget the major amount of volunteer work, which we all depend on, that needs support. Christmas is an obvious time to focus on that, but if you like the idea of allocating a percentage of your total wealth, no matter how small, to charities, the emotional return you get – although that’s clearly not the point – could be so much higher.