That’s the end of our Q & A today – thank you to everyone who submitted questions.
You can keep up to date with the Keep it in the Ground campaign here and if you’re interested in personal divestment, sign up to our “divest your life” series.
Finally, what if the stock market crashes? asks JoelChudleigh
Guardian staff On your second question, yes, it's entirely possible all your shares will drop in value at the same time during a market crash, no matter their individual prospects. One of the defining characteristics of the financial crisis/credit crunch that wrong-footed the experts was that diversification didn't work - almost everything went down.
The other thing you should be aware of with ethical funds is that they are nearly always more pro-cyclical than other funds. When the stockmarket is on a rising trend, they tend to do even better that other funds. When the stockmarket is on a downtrend, they do worse that the average.
Teadrinker123 is treasurer of the local Green Party – where should they put their savings?
Two questions to ask:
1. I have a <250 Standard Life shares, gain via their floatation, and now what to sell them as they are 'unclean' shares. How do I sell these shares and receive the cash?
2. I'm treasurer of our local Green Party; where is the most greenest place for our future 'election fund' savings? Amount likely to be under £3000 by 2020.
Guardian contributor The greenest accessible savings accounts that we promote are offered by Ecology Building Society or Triodos Bank as they make direct investments in sustainability. Alternatively you might consider Charity Bank, who only lend to charities, social enterprises and organisations with a demonstrable social impact. Each would seem to be a good fit for the Green Party principles - though of course it's well worth consulting an Independent Financial Adviser on such issues.
Check out our Good Money pages for more suggestions on where to align your cash with your values: http://moveyourmoney.org.uk/good-money
For public sector workers, pensions investments may differ, points out Patrick Collinson:
Guardian staff The UK's civil service pension scheme is 'unfunded'. In other words, it is paid for out of general taxation, not an underlying investment fund. So it is not invested in anything, such as oil and gas companies and therefore you can't divest. It is, fundamentally, an IOU that you'll get what the scheme is promising when you retire.
Is the Co-operative Bank still a safe bet for a self-invested pension? asks offalcheesecake
I'm hopefully about to pack in my company pension plan.
What are the best self-service pension providers with the greenest / most ethical choices?
Low cost and large number of choices would be good. No or low minimum monthly premiums would be good as I might be skint for a year or two but have built up a decent pot over the years.
Which sectors are looking best at the moment? Are there blogs / magazines / similar you can advise to keep up to date with the market?
Also, I'm still with smile/co-op for my banking and other products. Are they now as nasty as the other banks or do they still have a semblance of decency after having sold out?
Guardian staff For a 'self-invested' personal pensions there are now tons of choices - Hargreaves Lansdown is the biggest and best known but not always the cheapest. This lot called Lang Cat - analyse charges http://langcatfinancial.co.uk/guardian/. Broadly, I really like iWeb, it's super cheap and has the backing of Lloyds/Halifax who own it. But it's not for beginners who know nothing about investing.
On Co-op Bank/Smile, don't give up! Yes, it's now part owned by hedge funds, but it has been explicit in promising to stick to its ethical policy - which includes not investing in oil, gas or coal.
Guardian contributor Hey,
Glad you asked about the Co-op. They've had their fair share of problems - problems which were much more widely reported than those of their big bank contemporaries, despite being of a similar nature.
That said, they are still a lot better than the big 5 banks, particularly in terms of their ethical investments policy, which excludes fossil fuel investments. Incidentally, that ethical policy is now enshrined in their constitution, so it's no longer just a brand USP - it's fully protected for the foreseeable future.
They also consulted over 74,000 of their customers on what they wanted from the bank, which is far more than can be said for any of the big 5. Our full view on the Co-op, their takeover and their relaunched ethical policy can be viewed here: http://moveyourmoney.org.uk/heart-ethical-banking-structure-screening-co-operative-banks-new-ethical-policy/
Ultimately, they are still a bank that we promote as having greater ethical and sustainable credentials than their high street rivals.
This question about tracker funds, which mimic the behaviour of an index such as the FTSE 100, came in on twitter:
@guardianeco are there any tracker funds which don't have oil & gas firms in ? #keepitintheground
— Huw Morgan (@huwmanabroad) May 27, 2015
Guardian money editor Patrick Collinson says they can be disappointing...
Guardian staff No, not for now. Tracker funds are great, as they are so much cheaper than 'actively managed' funds but unfortunately I'm not aware of any trackers open to UK investors that are entirely fossil-free. The major index houses have already assembled the indices - such as the MSCI World ex-fossil fuels - but it's then up to investment companies to build a product around them.
That said, Triodos has a near-as-dammit tracker that avoids fossil fuels, if you look here: https://www.triodos.co.uk/en/personal/ethical-investments/socially-responsible-investments/sustainable-equity-fund/about-the-fund/
And responsible investment charity ShareAction have started a campaign for a fossil-fuel-free tracker
Guardian contributor We have set up a petition at http://iwanttobreakfossilfree.org calling on every major investment manager, mutual fund, savings platform and pension provider to offer a low-cost index-linked fossil free tracker product choice to people with savings and retirement funds.
Is ethical bank Triodos another alternative for people who want to go fossil-fuel-free?
Hi there,
When will Tridos begin offering a current account and is it worth me switching to co-op bank in the mean time?
Thanks
Guardian staff Hi I've met with Triodos several times over the last year, and they keep saying it's coming… the latest I've heard is sometime next year. Unfortunately since the financial crisis regulators have become super-cautious about handing out banking licences, which may be what's holding them back, but they tell me it is definitely happening. In the mean time, Co-op is a trustworthy alternative (although as a poster above notes, you'll have to hold your nose about the boss's pay)
What about annuities?
Guardian staff Here’s another question from a reader that came in by email: “is it possible to divest from a fund that is already paying out an annuity?”
Guardian staff Theoretically, yes - from April next year - although it will be quite a laborious process. As part of the pension freedoms that started in April, over 55-year old savers can do what they like with their pension savings. But that prompted many people to ask about existing annuitants. Could they cash in? In the spring Budget this year, the Chancellor announced plans for a ‘second-hand’ annuity market that would allow the 5.5 million people already taking an income from their pension the right to exchange it for cash. The problem is, this is just a proposal and wasn’t mentioned in today’s Queen’s Speech (although that doesn’t mean it’s not happening). The experts reckon that something could be in place by April 2016, although it’s at a consultative stage at the moment
Mind you, you’ll want to ask what your annuity is currently invested in. Because insurance companies are on the hook to pay out an income until you die (which is how annuities work) then the money is invested in pretty low-risk instruments, such as government (Treasury) bonds. The likelihood of your annuity being invested in risky, volatile shares such as oil and gas companies is pretty low.
How can we encourage others to divest without seeming like an “Ecowarrior”, asks one reader. ShareAction can help with that...
Hi, I have a question for Colin and the team (sorry in advance for the essay).
My employer has a CIMP Pension Scheme with Royal London. We are very fortunate in that each of our employees has complete freedom select which funds (from the entire Royal London fund range, which includes Jupiter Ecology) they would like to invest their pension in. While I am aware that most people are going to have to lobby their employers and pension trustees to have their pension divested for them, in the case of my colleagues and I, and everyone else whose employer is providing a CIMP pension through Royal London, the responsibility to do the research and make the divestment lies solely with the individual.
This presents us with a fantastic opportunity where maybe thousands of individuals already have the power to divest fully their pensions, but who are currently unaware that they have this power.
My question is: How should we approach the challenge making individual Royal London CIMP investors aware that they already of the power to divest and help them to really consider the case for divestment? I ask this because I believe that there is a tendency for the topic of divestment to be dismissed by most everyday people as the ramblings of an 'Ecowarrior'.
Guardian contributor Hi Robert,
You’re right, many people in defined contribution schemes can choose which fund to invest their savings in. The first thing that someone has to do is to research the range of funds available to them. This is easier said than done; there may be over 100 funds available, ranging from different asset classes and different investment managers to different screening criteria and annual management charges. Pension providers could be doing a lot more to communicate clearly to their members about the choices available to them. Another challenge is that as yet, we're not aware of a pension provider that has created a low-cost fossil free fund so savers have to choose between a low-cost fund and a low-carbon fund (you can sign our petition and help change that at http://iwanttobreakfossilfree.org )
The best way to mobilise groups of savers is to organise in your workplace – you and your colleagues can work together to understand your fund options and how to switch funds, should you decide to do that. ShareAction offers lunchtime talks and trainings and you can contact us at info@shareaction.org
What about building societies?
Guardian staff Here’s a question from a reader that came in by email:
“I have always understood than building societies do not invest in oil, gas and coal and are therefore another divestment option - please can you confirm that this is the case as it would give readers other options that are on the High Street?”
Guardian staff It’s true that building societies are generally cleaner on this issue than the banks, as the money they take from depositers is recycled into mortgage loans for house buyers. It doesn’t, for the most part, go into equity or bond investments, such as BP, Shell or Exxon. But they don’t get a completely clean bill of health. The bigger societies offer investment plans which are as knee-deep in fossil fuel companies as other investments. For example, if you buy an investment Isa at Nationwide Building Society, the money is passed to Legal & General tracker-style funds (the ones that mimic the FTSE) so inevitably it goes into oil, gas and coal. However with their cash-only Isas you can rest safe in the knowledge the money is simply going to support mortgage lending.
Fionn Travers-Smith from Move your Money, the national campaign for an ethical banking system answers question number four:
Hi! I'd like to know if there's anything you can do without switching accounts?
Guardian contributor Hi Burt,
We would always advocate switching to a more sustainable and ethical place for your money, both because it redirects capital towards worthy projects, and because it creates pressure for existing banks to change their ways.
For various reasons that's not always an option though. A good place to start is by opening an account with a positive operator - whether thats a savings account, a direct investment in renewable energy, or a current account that you gradually move over to at your own pace. You can also put your bank on notice that you intend to leave in the future if they don't divest from fossil fuels, which you can do directly through our website: http://moveyourmoney.org.uk/divest
There's also loads of other campaigning opportunities to help build pressure for change - whether that's through AGM activity with ShareAction, petitioning, or getting involved in direct actions for example with the wonderful Divest London group, People & Planet for student activism or Art not Oil.
The UK Fossil Free website is a great place to start for finding out how else you can get involved, with resources and advice on how to set up your own campaign or get involved in local fossil free drives
Guardian money editor Patrick Collinson takes this question from reader JIMKIERAN on pensions:
I have a private pension with Friends Life. As the fund has crystallised into a pension. how can I influence the provider, Friends Life, and ensure that it divests from fossil fuel investments?
Guardian staff Hi I presume by saying 'crystallised' then your savings have been converted into an annuity. If so, it's theoretically possible to extract yourself from your annuity - from April next year - although it will be quite a laborious process. As part of the pension freedoms that started in April, over 55-year old savers can do what they like with their pension savings. But that prompted many people to ask about existing annuitants. Could they cash in? In the spring Budget this year, the Chancellor announced plans for a ‘second-hand’ annuity market that would allow the 5.5 million people already taking an income from their pension the right to exchange it for cash. The problem is, this is just a proposal and wasn’t mentioned in today’s Queen’s Speech (although that doesn’t mean it’s not happening). The experts reckon that something could be in place by April 2016, although it’s at a consultative stage at the moment
Mind you, you’ll want to ask what your annuity is currently invested in. Because insurance companies are on the hook to pay out an income until you die (which is how annuities work) then the money is invested in pretty low-risk instruments, such as government (Treasury) bonds. The likelihood of your annuity being invested in risky, volatile shares such as oil and gas companies is pretty low.
Jon Hoare from responsible investment charity ShareAction suggests shareholder engagement as an alternative to personal divestment:
I cannot move bank account, as I live in Spain, but all finances in UK, and UK banks won't let us move, so stuck with HSBC. But I would like to know what to do with my Rio Tinto shares. They came via my mother, and before that from my Australian grandfather, so have been very reluctant to let them go. They are my only shares, a substantial holding, and currently give me 7%. I do not like the idea of anyone else managing my money, ie I don't like unit trusts or "managed" funds. I would like to invest in a green (ish) and honourable project, with a reasonable return , as I only have the state pension. I want it in £'s and held in UK. I look on the internet but trust nothing!!!!
Rio Tinto now divesting slowly from coal, and I do not object to mining as "we all" use their products. Views, ideas please.
Guardian contributor Hi there,
A: If you want to hold onto your Rio Tinto shares but are concerned about climate change, then one option is to engage with the company as a shareholder. ShareAction attended Rio Tinto’s AGM this year to ask about their membership of some trade organisations whose lobbying seems at odds with Rio Tinto’s public position on climate change and carbon emissions. This kind of questioning, whether at an AGM or through writing to the company can be very effective in raising issues up the agenda within a company, and they do take shareholder questions seriously. If you want to find out more about how to get involved in this kind of work, you can do so here: http://action.shareaction.org/page/s/empowerprogramme-get-involved (or email info@shareaction.org)
Our Q & A kicks off with a question on current accounts:
Hi! I'd just like to know: is there much choice out there in terms of fossil-free current accounts? Thanks!
Guardian contributor Hi MusicMan,
Thanks for your question. Whilst it is the case that there isn't a wealth of current accounts to choose from, there are more than there used to be - and there certainly are some that offer security, a strong branch presence, and are fossil free.
A good place to start looking is your local building society, which as a general rule of thumb don't invest in the stock market and use your deposits to fund loans and mortgages to people and non-financial businesses. A lot of building societies only operate in their local area and are well worth a look, but some like Nationwide, Coventry and Leeds also operate across the UK.
The Co-operative Bank also screen out investments in fossil fuels, including fracking and other unconventional methods. The Co-op have done a good job rebuilding since their troubles a few years ago, and are still far superior to the big 5 high street banks.
There's also Reliance Bank, which is owned by the Salvation Army, who offer fossil free current accounts too. All are good options, depending on what you're looking for.
For our full list of fossil free options check out our blog on the topic: http://moveyourmoney.org.uk/where-to-move-gdd/
In March, the Guardian launched Keep it in the Ground, its campaign calling on the world’s largest charitable foundations to divest their endowments from coal, oil and gas companies pursuing a business model that is setting the world on track to catastrophic climate change.
But fossil fuel companies are entrenched in the global financial system so if you have money sitting in a mainstream bank account, savings pot or pension scheme it’s almost certainly invested in them too.
For those among us who find this fact uncomfortable, all is not lost. Investors, entrepreneurs and financial institutions are waking up to the rising demand for fossil-fuel-free products. There are ways the general public can divest their own money or put pressure on the such institutions to provide them with an option to do so.
In May, following demand from readers, we launched a new series on how you can “divest your life”, beginning with guides from Guardian money editor Patrick Collinson on divesting your pension fund and divesting your bank account.
From 2pm (GMT) on Wednesday, Patrick Collinson will be online to answer your questions on personal divestment. He will be joined by Jon Hoare, Director of Investment Networks at responsible investment charity ShareAction, and Fionn Travers-Smith, Operations and Development Manager at Move your Money, a national campaign for an ethical banking system.
You can submit your questions in advance or live in the comments below or send them to us on Twitter @guardianeco and using the hashtag #keepitintheground
Readers should be aware any answers given do not constitute financial advice or endorsement of any particular product. Readers should consult a financial advisor where appropriate.
Updated
Hi There
I have 2 questions:
1) If you had £200,000 in life savings and wanted to invest it ethically but were happy with a good degree of risk on 50% of it but wanted to invest everything ethically then what would you advise?
I have recently invested a small amount in some funds with Triodos that seem to be doing very well (better than the funds that i divested from) but I am not keen to have all eggs in one basket.
I have been thinking about buying shares in Tesla and SunCity as really inspiring companies and also I am keen to invest in other green projects. Funds seem like a safe bet as they are investing in a range of companies that are unlikely to all do poorly at the same time.
2) One concern I have is my lack of knowledge - people talk of a potential stock market crash - how would it happen that all companies lose share value at the same time? If I invested in an ethical fund then is it possible that all companies in the fund would drop in value at the same time?