myi: How much has the ethical investment market grown over the last few years?
The global carbon markets almost doubled in size in 2009, a year when almost every other major industry sector across the world suffered decline.
Previously seen as something of a sideline offered as a way to ‘tick the box’ in a range of offerings, investors are now demanding to know the ethical credentials of the products they are using, which in turn is putting pressure on investment companies to come up with better and wider ethical and socially-responsible options for their clients.
myi: Why are more people opting for this type of investment?
Due to the near collapse of the banking system and rapid decline in the global stock markets in 2009, there has been significant concern over the stability of traditional investments in which people have often relied upon heavily as their ‘nest egg’.
As the global economy has struggled, awareness of global warming has increased, the world population has continued to grow at a rapid pace, and more people are making an effort to have a socially responsible outlook to their future investments.
Over the last eighteen months, there has been significant growth in so-called ‘ordinary’ investors who are increasingly finding that SRI fits their requirements from both an investment and an ethical point of view.
But while they are more conscious of the environmental and social impact their choices cold make, they are by no means prepared to sacrifice good investment sense to buy into such products.
myi: What are the most popular forms of SRI?
Carbon offsetting is one of the most popular forms of SRI. In the offsetting business, businesses wishing to become carbon neutral pay to outsource emission reduction because it is more cost effective or technologically feasible than at home.
The market is growing rapidly and investors are branching out to include private individuals, organisations and entire industries such as those in the automotive and transportation sector.
In addition to carbon offsetting projects, there are SRI opportunities across the globe, from forestry investments in Brazil that aim to eradicate illegal logging in environmentally-sensitive areas, to farmland investments in Australia which will produce food to help ease global shortages.
myi: Can ethics and profits really mix?
Yes they can. There’s a perception that they can’t, but choosing an SRI route does not mean that you have to sacrifice profit for principles.
SRI typically involves investment in the few industries which have managed to remain in positive growth through the global recession.
And since people have lost trust and confidence in the more traditional investment models, the returns demonstrated by SRI products combined with their social, environmental and ethical benefits make for a very compelling investment case.
We feel very strongly that helping that planet and making money can go hand in hand. Our objective is to create a diversified investment portfolio that generates strong returns on invested capital whilst delivering meaningful and measurable environmental benefits.
myi: What kind of investments do you offer and what are your results so far?
Projects to date have included discounted carbon credits direct from a prestigious project in the Amazon, an asset-backed bond that invests in bamboo plantations in Central America, and investments in timber plantations in Brazil.
Customers who invested in our first two carbon offset projects received their capital plus 30 per cent back well ahead of the predicted 12-month fixed term for the investment.
The third batch also delivered fixed returns to investors on time at the beginning October and the fourth batch is due to do the same in April 2012.
The fact that this kind of global investment model is performing to its original target offers investors the reassurance they need in an uncertain market.
myi: What would you say to someone who is hesitant about diversifying into SRI?
Investors are, of course, quite right to be wary when committing to any new investment, and we always encourage prospective clients to make sure they carry out thorough research before committing to invest. In addition, we always suggest that they seek the advice of a qualified IFA.
Making sure our investments fit with the requirements of our clients and their overall investment strategies is of paramount importance, so we take a huge amount of time conducting research and analysis to ensure all projects presented to investors have undergone robust selection process.
We also look for projects which are not only exclusive, but which also have a recognised international accreditation so that we know there won’t be any issues further down the line with selling the resultant product of any investment, or with exit strategies.
Exit strategies are another area where we try to ensure we have the highest standards for clients. All of our investments have either the option of cashing in early on the investment rather than waiting for the full term to run, or a defined exit after a prescribed period of time, often with fixed returns.
It’s also worth mentioning that, where appropriate, we ensure that our projects are SIPP approved as it allows a greater degree of flexibility for investors who wish to use their private pension to invest in different asset classes.
myi: This isn’t an FSA regulated operation. Should that be of concern to investors?
We don’t think that should be a concern. W
