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Money Talks

By Amanda Powell-Smith

21 November 2019
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It has been an incredible year of change. Business leaders, politicians and the public alike are approaching 2020 with recognition of the climate emergency and a desire to do something about it. But change costs money – and it’s up to all of us to help.

While the UK Government and a wide range of businesses publicly commit to net zero targets, there is a quieter revolution taking place in the financial sector as carbon emissions are recognised as a growing risk.

Action is happening in different ways: from the Governor of the Bank of England Mark Carney warning major corporations that they have two years to agree rules for reporting climate risks before global regulators devise their own and make them compulsory; to the European Investment Bank announcing an end to financial support for fossil fuels by 2021.

On 1 January 2020, the UK Stewardship Code 2020 comes into effect. It makes it clear that ‘Environmental, particularly climate change, and social factors, in addition to governance, have become material issues for investors to consider when making investment decisions and undertaking stewardshipand marks an important moment for making ESG investment mainstream.

Much of this is driven by risk rather than opportunity but the impact investment sector is also growing, bringing much needed capital to new sustainability solutions and providing a return on investment at the same time.

Now it’s up to all of us to start talking openly about our money and what it is funding. A recent survey from the Department for International Development showed that 68 percent of UK savers want their investments to consider the impact on people and the planet, alongside financial performance – but few know where to start.

The language around ethical funds is unregulated and confusing, and greenwash is increasing. This week, the Investment Association launched industry-wide definitions on responsible and ESG investing, in a move to create a common language for advisors, fund managers and consumers. It could help – but there is a clear leadership opportunity for financial advisors and institutions who choose to stand out for transparency.

Next year, a major public campaign Make My Money Matter will launch and use people power to change the way that pensions are invested, increasing the amounts that are being used to tackle inequality and achieve the Sustainable Development Goals.

It will give individuals the confidence to ask questions about what their pension fund is supporting. It will give both people and organisations the opportunity to use their savings and investments as a tool for change, not just a vehicle for generating returns.

The communications challenge for businesses is two-fold – demonstrate their commitment to being more progressive and sustainable, and highlight the positive difference investing in them will make.

For charities, the challenge is inspiring supporters to invest in a way that furthers their cause and means promoting active investment as a tool for change alongside charitable giving, volunteering and campaigning.

Money talks in many ways.  The conversation is set to get louder and all progressive organisations need to be part of it.