I have been with the same bank since I was 16. I'm not the sort of person who reads the 'Money' pages of the papers to find the best deals on bank accounts or mortgages. I reckon that there are enough people out there who are keeping an eye on the options to keep my bank on its toes. And if my bank was doing something really bad, I'm sure I'd hear about it.
Each month, I pay a bit of my salary into my pension. I want to make sure that I can afford a decent standard of living when I retire. I don't know who manages my pension; it's done through my employer. I know we use one of the big, well-known investment managers, so I'm in good company.
With a young family, I don't have a lot of spare cash. When I treat myself, it's usually by buying new kit for my bike. I bike to work most days. It's partly for the exercise and because it's cheaper than public transport, but also because I'm trying to reduce my carbon emissions. I'm worried about climate change. When you're on a bike, you can feel each extra inch of rainfall and each degree of temperature change. It makes you think. So I try to buy food in season, keep the heating down in my house – all that kind of stuff.
I inherited £10,000 when my aunt died a couple of years ago so I looked at the various places I could invest it. This was the only time I've ever really done any serious research on money, I couldn't just have this cash sitting in my bank account. I looked at the options for ethical and socially responsible and sustainable investment. I wanted a decent return as I'm not someone who can afford a lower return just to make me feel good. Although I was tempted when I found that a few of them are getting really good financial returns, in the end I decided to invest in a normal fund.
I felt safer with a normal fund. With the other funds, I couldn't really tell how their approach would affect my return. I also know that my fund can't be investing in bad things as there are laws to prevent this. In an ideal world I would want my investment to contribute in some way to reducing climate change but all of those options seemed risky. I want to rely on my pot of money growing so that I can afford a proper wedding for my daughter.
Key points
• The herd may not be right. We take comfort from the knowledge that we are making a 'normal' investment rather than stepping out of line in our investment decisions. We feel that it is safest to stay with the herd.
• Interests can be misaligned. The people who manage our money may be incentivised to maximise short-term returns. This will not always deliver the best return for the investor in the long term. It may prevent companies from managing longer-term value creation – for example through innovation, management of natural resources, supportive relationships with suppliers and customer satisfaction. • Resilient investment value may depend on 'softer' issues
Our pension funds need to be managed in a way that will deliver resilient returns for members in the long-term. This means managing social and environmental issues effectively across all funds, and not just in the ethical funds.
• Our financial decisions have an impact. We are making at least as much impact on climate change through our decisions on pensions, investments, savings and bank accounts as we are in other parts of our lives that have a more immediate and tangible impact. Yet we devolve responsibility to fund managers.
It will require collaboration and/or public policy to reduce the long-term risks to the system that are being stored up through short term investments in activities that exacerbate climate change.
Key actions
• Don't take for granted that your long-term interests are being served by the current system.
• If you have a pension, ask your pension fund trustees how they check on what the fund manager is doing to incorporate social and environmental risks and opportunities into his decisions. If your pension fund trustee tells you that, if you are interested in those aspects, you should invest in an ethical fund, challenge this: all fund managers need to review these fundamental drivers of value.
• Don't assume that all banks are as good / bad as each other. Some have better policies than others. Write to your bank and ask them how they are planning for the transition to a low carbon economy and how they are managing the risks of climate change.
Alice Chapple is director of sustainable financial markets at Forum for the Future
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