by Claire West
This Monday 28th February, Fair-trade Fortnight, pioneered by The Fair-trade Foundation is set to kick off with a bang. Fair-trade Fortnight (28th February-13th March) is an annual event in which fair and ethical trading values are celebrated. The aim of Fair-trade Fortnight is to raise awareness of fair trade and celebrate products and shops that give 7.5 million people in the developing world a more secure future.
To say that the world of investments has changed in the past two years is a serious contender for perhaps the most obvious financial statement of the year. The last few years have witnessed what were previously seen as peripheral investment opportunities gain momentum and bring about a new dawn in investment strategy. Fair-trade and sustainable investment has gathered considerable momentum and is rapidly becoming centre stage as more people have begun to realise the myriad of benefits to disadvantaged communities around the world. Moreover, ethical and responsible businesses are gaining rapid attention from investors who are starting to integrate socially responsible investments into their portfolios as a result of the stability and growth offered by such investments.
The principles promoted by this year’s Fair-trade Fortnight are increasingly being shared by a growing group of investors who are being drawn by the opportunity to align their principles with the strong growth offered by socially responsible products. Contrary to popular belief and much to the relief of today’s environmentally aware investor, there are ways to marry profit with tackling the wider issues of climate change, poverty in the developing world and renewable energy. Consequently, the pressure has never been greater for investment companies to come up with better and wider ethical and socially responsible options for their clients.
For example, investment management firm Emerald Knight Consultants have made it their mission to fulfil all the principles celebrated by Fair-Trade fortnight whilst also guaranteeing low risk and high return investments, thus proving that it is possible to make money and also help the planet. Their products can be defined as anything from a bank account which promises not to use its funds in order to invest in certain classes of product at a corporate level, to clients buying directly into projects which have a proven ethical, environmental or socially-responsible element.
Rob Hague, Director at Emerald Knight says, “A clearer conscience and ultimate peace of mind has to be the priority when making an investment. When married with the promise of uniquely and exceptionally high returns, the only choice becomes the obvious one.”
The UK Coalition government has also recently proposed a Green Investment Bank reliant on low-carbon technologies, and a new UK Equity Index fund investing in carbon credits claims to reduce the CO2 footprint of a portfolio by up to 20 per cent by investing in companies with carbon-efficient operations. While this new fund has yet to provide statistics on real returns, another Socially Responsible Investment (SRI) such as that of Emerald Knight has realised 30% fixed returns on an investment in a particular carbon-offsetting project.
Research estimates by financial consultancy Celent predict that the Socially Responsible Investments (SRIs) market in the US will reach $3 trillion this year. The European SRI market grew from €1 trillion in 2005 to €1.6 trillion in 2007.
The attention on carbon-cutting investments leads to questions on how they actually work.
Emerald Knight's Rob Hague, also says: “Companies around the world are trying to proactively and voluntarily reduce their carbon footprints through offsetting. A voluntary emission reduction (VER) is a unit earned by someone who has implemented a project according to international standards that generates a reduction, removal or storage in greenhouse emissions. This unit is then issued by an authority or a Board and bought by someone to offset their own emissions.
"In the offsetting process, businesses wishing to become carbon neutral pay to outsource emissions reductions because it is more cost-effective or technologically feasible than in-house. This market is growing rapidly as global carbon markets almost doubled in size in 2009. Investors are even branching out to include private individuals, organizations and entire industries, such as those in the automotive and transportation sector.”