Ethical banking has been part of the UK financial landscape for a decade now, but still remains a relatively small niche in the industry. As the country calls for reform of the financial sector, now may be the time for it to come to the fore as the industry standard.

The majority of people have no idea of what happens to their money once they deposit it into a bank. According to research conducted by Charity Bank last year, 78% of Britons don’t know how or where their savings are invested. In the search for the highest possible returns, high street banks often use money their customers deposit to buy assets worldwide. In the case of some banks, these assets may be obtained from investments depositors may view as unsavoury – if they knew their money was funding them, that is. This lack of transparency and accountability to the communities has led to people feeling disconnected and distrustful of their banks, bankers and the financial services industry as a whole.

The strength of this backlash combined with the anger at excess bonuses and a lack of personal relationships mean that many people are looking for more ethical and transparent ways of saving and investing their money. Organisations like Move your Money are embracing these values and attracting other organisations to put their weight behind the trend, encouraging members of the public to move their savings into ethical banks and local credit unions. Banking with these organisations will ensure their money is being used to support local communities, as well as social enterprises and not-for-profit organisations.

As well as having an ethical investment policy, transparency is a key element of social banking. Ethical consumers want to see the social impact their money is making and where it is being invested. They want to be assured that their money is ‘doing good’. This level of accountability should not just be the reserve of ‘ethical’ banks and consumers, however. Of course it helps banks like Charity Bank to differentiate themselves from the more mainstream competitors, but in an ideal world, it would be considered an industry norm.

For example, high street banks could take steps to build bridges with the communities they serve simply by publishing a list of projects they fund using their depositors’ money on their websites. Such transparency would help to build trust with consumers and encourage the banks to look more closely at their own practices. If a bank were required to publish the details of more controversial projects it was funding, such as arms deals or destructive environmental practices, it might choose instead to invest its money elsewhere, rather than face negative publicity and unhappy customers!

The government has recognised that steps need to be taken to make banks more accountable to consumers, but is slow to agree the terms of how to carry out these changes. Still under debate, last year’s Vickers report, for example, calls for banks to ringfence their high street businesses from their riskier investment practices. Although this is a positive step, it is still not enough. Banks should be required to be transparent in their practices not only to regain the trust of the consumers, but to hold themselves to account.

The social banking industry also sets a good example of serving communities, a value that most high street banks seem to have lost along the way. Even large, global banks can serve the local communities of their branches by re-investing depositors’ money into local businesses and charities, making their services more personal. It wasn’t so long ago that bank managers used to walk their customers’ dogs while they were doing business in their branches. Times may have changed, but people’s desire for more personalised services has not.

While there may have been a time when all that was required from a bank was to deliver the highest interest rates or financial returns, consumer’s priorities have shifted. Even in the recession, reputation and service matter more than a few percentage points of interest. In order to repair the damage and mistrust cultivated in the years leading up to the crash, the banking industry as a whole must reform. Now is the time for all banks to rise to the occasion and consider a more sustainable approach to banking. If we all viewed money as a tool for enhancing society rather than purely for maximising profit, it would go a long way to restoring the industry’s image. As I get ready to step down from my post at Charity Bank I would like nothing more than to see the adjectives of ’social’ and ‘ethical’ disappear from banks – not because the principles have been abandoned, but because they had become ubiquitous in the industry and are therefore redundant.

Article first published on the Guardian Online

Charity Bank – Ethical Bank is an active member of Ethical Junction, learn more

Our 2011 ‘Different Journeys’ programme is now complete.  It was our most ambitious programme of visits to date, taking the public to see 20 of our borrowers during National Ethical Investment Week.

These visits have enabled us to share directly with our customers and the public the difference that money saved and invested in Charity Bank is making to charities, social enterprises and communities across the UK.

Our stakeholders were offered the opportunity to meet borrowers and the people they work within their local area.  In doing so they have cemented a three-way bond among savers and investors; borrowers; and the Charity Bank team, reinforcing the values that the bank has developed.

They evidence how everyone can choose to use their savings to make a difference whilst earning a financial return.  And as one commentator put it, the visits are ‘bringing trust and responsibility back to banking’.

Charity Bank remains committed to showing that everyone can be a ‘Social Investor’, or ‘Social Saver’ – and we believe there is no better way to convince people than to show them the projects their money could be supporting.

To learn more about Charity Bank visit our website, to catch a flavour of the visits you can view our photo album, or to receive details of future visits please sign up for the Charity Bank news bulletin.

Charity Bank – Ethical Bank is an active member of Ethical Junction, learn more

Research has revealed that 78% of Britons don’t know how or where their savings are invested.  We investigate further, asking the public where they would and wouldn’t want their savings invested.

This video is part of our campaign, in the build up to National Ethical Investment Week, to raise awareness of the good you can do just by saving money with an ethical bank – and of how easy it is to do.

Where Your Savings Go (National Ethical Investment Week) from Charity Bank on Vimeo.

To learn more; join one of Charity Bank’s borrower visits, explore Charity Bank’s ‘Think Ethical, Save Ethical’ microsite, or visit www.charitybank.org

Charity Bank – Ethical Bank is an active member of Ethical Junction, learn more

Wherever it’s invested, money takes a journey. This might be round the globe, round the big banks or round the stock markets. Sometimes it does some good along the way, sometimes it doesn’t.

Charity Bank makes sure that our customers’ money takes a shorter journey.  It spends less time travelling around and goes directly to charitable projects that benefit everyday communities, every day.

We invite you to join our 2011 Different Journeys programme, an inspirational opportunity to discover for yourself the difference our depositors’ money is making to our borrowers and the people they serve.

Each visit gives you the chance to meet the staff of the charities we support, as well as the people they work with and help.  We are hosting eight visits throughout National Ethical Investment Week.

We are hosting visits in the Midlands, Yorkshire, London, Cardiff, Hastings, South West, North West and Northern Ireland.

Learn more or sign up on our dedicated campaign micro site for National Ethical Investment Week.

Charity Bank – Ethical Bank is an active member of Ethical Junction, learn more

Sustainable Finance: What’s your money doing behind your back?

Do you know what your bank does with the savings you entrust to it? Have you ever even wondered?

Recent research shows that 30% of bank customers admit having no idea what their bank is doing with their money. Amazingly, one in three customers believe their bank would simply add occasional interest to their savings or just lock the money away in a vault. Only four in 10 of us are aware that our money may be lent out to a range of companies and organisations, and just 45 per cent of us recognise it may be used to fund banks’ investments elsewhere.

How banks put your money to work

Money does not stay still, it is passed around the global system, being lent and invested. This activity seems a far cry from handing over hard-earned cash at a local bank branch for safe-keeping.  But the fact is that, once out of your hands, your money enters a system which is far from transparent. High Street banks’ lending and investment decisions could see your savings helping to fund businesses and organisations you do not approve of – for example, tobacco firms, arms manufacturers, undemocratic regimes, businesses with appalling records on pollution. The list goes on…

Of course, these same banks also support ethical businesses, and individuals – the problem is that in today’s interconnected global financial marketplace you cannot be sure that your savings are not doing harm.

You won’t be surprised that there aren’t a lot of ‘ethical banks’ around. Some simply screen out negative impact businesses and organisations from their lending and investments, while at Triodos we only invest in positive impact businesses and organisations.

Of course it would be naïve to expect the big banks to adopt this level of transparency any time soon;, but surely any step towards better transparency on lending and investment decisions, using your money, would be a step towards empowering savers.

Consumer choice

Increasingly, British consumers want to know how the products they buy are sourced and produced, from fishing to clothing to coffee.  If as a consumer you take an interest in, for example, how the food you eat reaches your plate, and make purchase decisions based on this, why not also challenge and understand how the money system works?

Ask your bank how they are using your savings, and ask them whether they lend to or invest in areas you may disagree with, be it arms, polluting companies, tobacco firms, or undemocratic regimes. Show that you are interested, show that you need them to be accountable to you, their savers, on ethical issues, in just the same way as many other big companies now are to their customers.

And if they can’t or won’t answer, or you don’t like what you hear, why not make your voice heard and move your savings to an ethical bank that can, and will.

Huw Davies is Head of Personal Banking at ethical and sustainable bank Triodos

You can see all the places where Triodos puts savers money at
http://www.triodos.co.uk/en/about-triodos/what-we-do/who-we-lend-to/

Triodos Bank is an active member of Ethical Junction, learn more

As climate change issues grow in their severity and investors grow more sophisticated, the nature of investing is becoming more environmentally and socially responsible.  Nowadays, we want to see a profit from our investment but we also have a moral conscience about what we do with our money.  With an array of socially responsible investment available today, this is not a problem for the new-age investor, but there can be pitfalls.  Read the Silva Tree guide to socially responsible investing, and avoid the cowboys.

1. Check out the investment structure.  Is there a legal safety net, is there an FSA regulated body involved?
2. Check out the social element- are the benefits to environment/society proven anywhere?
3. Beware of your IFA- Some IFAs will put you off a product because it earns them less money.  Make sure the advice you receive is from an impartial advisor.
4. Do your homework- due diligence is important, make sure you checkout all paperwork and don’t be afraid to ask for proof of anything you feel is appropriate.
5. Don’t believe everything you read- don’t rely on the press or the internet for your research.  In today’s society, anyone can post anything, whether or not it is true.  You could be reading a positive review written by the investment company’s CEO, or a damning report by their competition.
6. Do use the internet wisely- check out companies house, recognized social organizations and reliable internet sources to confirm evidence of the investment’s existence and performance.
7. Check the standards- does the investment follow some sort of published social standard or code of practice? 
8. Don’t be too easily impressed- glossy brochures and smooth talking staff are not an indicator of a good investment, neither is evidence of money having been spent on development. 

Finally, trust your gut feeling- if you find the organization offering the investment to be pushey or evasive, take extra care.

Silva Tree Panama develop environmental projects in Central America, adopting a secure investment structure based in the UK.  FSA-regulated trustees Citadel Trustees hold all projects in trust and handle investor monies.  Silva Tree work with many FSA regulated IFAs, wealth management companies SIPP trustees and international agents.  They launch their Paulownia for Biomass fund, operated by Citadel, this autumn.

Silva Tree is an active member of Ethical Junction, learn more

If you’re a news hound or a regular visitor to Ethical Junction, you’ll no doubt be up to speed  on climate change, green energy, UN summits, energy independence, wind, solar, biomass, and then about how green energy is the hottest investment since, well the other types of energy. Let’s just look at energy, as solving the energy crisis is one of the world’s most pressing concerns. If you take a quick look at the Fortune Global 500 list or lists of the world’s most profitable companies you’ll note that the higher rankings are dominated by traditional energy firms: Shell, Exxon, ConocoPhilipps, Gazprom, China National Petroleum and even BP. Energy is needed by everyone, fact. However it’s also a fact that world governments have strict, and in many cases legally binding targets to increase the use of renewable forms of energy within their territories. So it stands to reason that green energy is the future. And it’s not hard to imagine that in 20 years from now the world’s most profitable companies or world’s greatest investments will not be what they are today. The most profitable companies or investments will be those that provide solutions now to the big challenges.

At Silva Tree we are getting ready for the launch of what has become a highly anticipated fund for biomass energy. Biomass is a biological material derived from living organisms, commonly trees or woody material. Biomass is converted to energy through combustion, however it is carbon neutral since when it releases carbon into the atmosphere that carbon is then absorbed by the growth of new biomass. Biomass is produced in tree different forms; briquettes, pellets and chips and then shipped off to the generators for conversion.

It’s an alternative energy source that is rapidly growing in acceptance. Part of the reason for this is that energy firms that currently burn coal can convert their existing plants to burn biomass, and as biomass is a renewable energy source governments may give subsidies and tax benefits for converting. For example the UK energy firm Drax, also the largest emitter of CO2 in Britain, plans to convert its coal fired stations to biomass within ten years. The CEO stated in the Guardian newspaper “Drax is a viable business today as a coal plant. But the opportunity to turn it into a renewable power company is an exciting one and makes sense for the UK’s carbon targets and for our shareholders.”

Silva Tree will provide its biomass from the fund investment to energy firms, both private and state owned. At our plantations in Panama we cultivate the fast growing and resistant Paulownia Elongata tree. This is a fascinating tree and has adapted well to the Panamanian environment. We are already using it for our Princess Project timber investment. It means that in Panama in just three short years after planting the trees are then ready to be used for biomass energy, the trees then regenerate and are ready again in another three years. Of all the biomass sources out there Paulownia is perhaps the most ideal, but also at this point a best kept secret. That is why our biomass project is attracting so much attention, and we at Silva Tree are extremely excited about the prospect for our biomass and the biomass fund itself.

The biomass fund is due for launch to the investment market shortly and will be available to individual investors and institutions. To register for details contact Silva Tree directly. www.silvatree.com

You will be given a better insight to our phenomenal Teak projects in Brazil, that are yielding our existing clients 10-20% per annum.

Date: 19th May 2010
Time: 6.30pm – 8pm
Location: St Clements House, 27-28 Clements Lane, London, EC4N 7AE

RSVP: As places get booked up very quickly, please ensure you RSVP before 5pm on the 19th of May 2010. Email: darren@globalforestryinvestments.com or call to book your place on 020 7754 0493. Alternatively you can fill in the Event Registration form on the right hand side of the website.

Global Forestry Investments is an active member of Ethical Junction, learn more

With rapidly increasing demand for commercial timber and other wood and paper products, forestry investments are becoming an increasingly obvious choice for investors seeking to gain positive medium to long-term returns. Here we discover how Foreco Growth Investments, a leading provider in the Forestry Investment business, offers products to meet this growing demand.

The Facts

Commercial woodlands are defined as property where timber from the forest is actively being marketed and sold. According to the research house Investment Property Databank, forestry has recently been the best performing asset class, returning 26 per cent better returns compared to 17 per cent for shares. With a continually expanding world population which increases pressures on natural and sustainable resources, timber offers excellent prospects for investment with a real opportunity for profit.

Foreco Growth Investments

Foreco Growth Investments Limited (Foreco) is a unique investment-based company which offers you the opportunity to take part in socially responsible and highly lucrative investment opportunities, bringing benefits to both you and the world you live in. The way our forestry investment proposal works is really quite simple; a client of Foreco is o­ffered the opportunity to purchase a plot on one of its plantations in Europe and becomes the legal owner of that specific plot. As part of the purchase price the plot will be planted up by Foreco with Robinia trees. The client has full control of the investment and manages and maintains the plot and trees by appointing a highly qualified forestry manager for this task. The forestry management company will see to the full management of the plot and provide regular management reports and health-checks. You’ll then have the opportunity to harvest the trees. This is typically after 10 years. Once this is complete, you sell the timber poles and also make returns from the sale of wood chips, which is sold as biomass. Once the development is complete, you have the option to restart the process or sell poles and also make returns from the sale of wood chips, which is sold as biomass. Once the development is complete, you have the option to restart the process or sell the land.

How useful is Robinia Timber?

Robinia (Pseudoacacia) is a timber species that compares well in quality with many tropical hardwood species. Being one of the hardest timbers around it has many applications in the building trade, the furniture industry, and the shipping industry and is virtually maintenance free. One of its biggest advantages however is that the tree grows quickly, about 1 metre in height and 1 centimetre in diameter per annum. This means that any investment has the potential of materialising after just 10 years, whereas an average timber investment would normally see returns after 20 to 25 years. For the more technical investor, it’s worth adding that after a limited test in 2000, Robinia was classified under strength class K30 in compliance with NEN 5498:1997. The visual sorting criteria for Robinia concern the distribution of knots, which is no higher than 0.3 and grain deviation of no more than 1:10.

Determining Demand

Foreco have a clear outlook on the returns possible from timber and the ­gures really do speak for them themselves. After oil, timber is the most intensively traded raw material in the world. The demand for timber rose by 60% between 1960 and 1990. The food and agriculture organisation of the United Nations (FAO) expects this demand to experience a further rise of 50% up to 2010, not including the demand for roundwood. The present supply of hardwoods from managed plantations cannot meet this need. Fifty countries that have joined the International Tropical Timber Organisation, including the EU, USA, and Japan, decided in Geneva that, from 2000 onwards, only hardwoods that are logged from sustainable forests and plantations can be imported. A clear sign of times to come.

Helping save the Environment

Besides the opportunity of receiving healthy returns of anything between 8-15% on your investment, there are several other environmentally sound reasons why potential investors would look to invest in Forestry and Robinia. Firstly, Robinia is a tree species that is known for its phenomenal early growth, during which it absorbs large amounts of CO2. One hectare of Robinia binds on average around 15 tons of CO2 per year. Considering the standard household emits about 9 tons of CO2, it clearly compensates for one’s own CO2 emissions. Also, burning wood to produce energy emits less carbon than burning fossil fuels, especially if the trees are replanted, because plants trap CO2 from the air as they grow. One of Foreco’s key objectives is to promote social sustainability and environmentally responsible conduct, and it’s clear from their product offerings that the company is thriving to meet their commitment to both investor and environment alike.

The Bottom Line

An investment with Foreco allows you to buy a plot of land based at their European Plantation Partner site in Germany with trees planted on it, the timber from which can be cut after a certain time and subsequently sold. There is no joint participation with others and the money paid is for the plot and the initial planting. Foreco differentiates its services from a collective investment scheme by stating that it’s the client who has day-to-day charge over the plot they buy, giving them the control to really prosper from the investment.

Next Steps

To ­find out more about our Robinia Plantations please feel free to call a consultant on 020 7148 7100.

Foreco Growth Investments is an active member of Ethical Junction, learn more

The government is finally getting serious about the public’s energy concerns with the introduction of the new Feed in Tariffs, also known as clean energy cash back. This means that from April 2010 you will be paid generously for all of the energy you generate, leaving you free to choose whether to use the energy to reduce your bills or sell it back to the electricity company and thereby being paid twice.  Putting this into context, based on a standard solar photovoltaic system you would receive 36.5p/kWh through the feed in tariff, a total reduction in energy bills and an extra 5p/kwh for every unit you export. This totalled over a year could be a sum in excess of £900. Compare this to the initial investment costs and you are looking at a return of around 8% per annum, far better than the returns offered by any high street banks. Looking at the potential savings in relation to the recent ofgen report stating that the cost of energy for households is forecasted to rise by 60% over the next five years, it becomes clear that turning to renewable energy could become essential to homeowners in the future.

If you have been interested in utilizing solar power in your home but have been unsure about how and when, you should act sooner rather than later, a £2500 grant is on offer by the Government to assist with the cost of installation but is only open for a short period of time.

In the coming years the cost of energy will inevitably increase, by choosing to invest now you can take full advantage of the Governments grant and the generous Feed in Tariffs by the time your friends and neighbours are dreading their next energy bill you could be safe in the knowledge that you have a sustainable and profitable energy supply.

British Eco Ltd is an active member of Ethical Junction, learn more