Introduction
This report examines the competitive landscape for "green" products and
services in the financial services industry. It looks at how competitors are
communicating their Green credentials to customers, the extent to which
perception compares to reality and what this means to their customers.
Scope
- Discussion of the key issues surrounding the provision of green financial
services.
- Highlights the main positive and negative criteria used by investors
considering a green investment proposition.
- Analysis of the main competitor issues, including the potential for growth
in green investments and discussion of the main competitor offerings.
Report Highlights
The sudden surge of interest in environmental issues from consumers follows
exponential growth in environmental awareness on a global scale, owing to the
massive media coverage surrounding global warming, oil prices and the
exploitation of workers in low-wage, "sweatshop" environments.
Carbon footprint reduction can be facilitated through adopting a carbon
neutral approach to business practice. Carbon neutrality means reducing carbon
dioxide emissions to net zero, which represents a point of environmental
equilibrium wherein carbon emissions are counterbalanced by carbon savings.
A variety of "green" financial products currently exist in the market, away
from the direct investment side, which has manifested itself via the creation
of ethical fund offerings. The emergence of "green" credit cards, as well as
"green" banking institutions and insurance companies relate to ethical
credentials and reputation.
Reasons to Purchase
- Understand the steps financial services companies can take to adopt a more
environmentally friendly business practice.
- Gain insight into want investors demand from a green financial services
product.
- Become aware of the costs involved in adopting green business credentials
and the prospect for future growth in green financial services.
Table of Contents
- CHAPTER 1 EXECUTIVE SUMMARY
- Issues in Green Financial Services
- Competitor Issues
- CHAPTER 2 ISSUES IN GREEN FINANCIAL SERVICES
- How did ethical/green investments originate?
- What is a "Green" financial services company"?
- Who enforces the criteria for classification as a green company?
- Many companies tend to use external consultants to identify companies
with green credentials
- EIRIS researches the social, environmental and ethical performance of
some 2,800 companies across the world
- How can financial services providers be more green?
- Environmental performance is translated into monetary terms via the
use of carbon footprint analysis
- Companies can alleviate their carbon footprint by adopting carbon
neutral practices in all areas of their business operation
- All companies can work towards carbon neutrality by looking at
office practices, as well as their overall business approach
- Companies can also become greener by changing transportation
methods, recycling & using different office materials
- Emission-right trading has been cited as a green option but does
nothing to mitigate the effects of climate change
- Striving towards carbon neutrality will do more to bring the
environment into balance
- In Financial Services, ethical funds are becoming more popular, although
some funds are classified as more "green" than others
- Ethical/Green funds have grown in popularity over recent years
- But this has caused some confusion as to the characteristics of a
typical "green" fund
- Ethical funds are subjected to a screening process for purposes of
classification
- Not many financial institutions use these criteria, as some have just
begun to explore ethical/green investment offerings
- What does a "green" customer want?
- Green investors utilise a variety of positive criteria with regard to
green investment
- They also employ negative criteria, to avoid companies involved in
areas such as tobacco or weapons production
- Some traditional investment vehicles have also taken on green credentials
- Environmental concerns have spread to additional products
- What are the costs involved with being green?
- The government-commissioned Stern Report advocates immediate action to
combat climate change by outlining the costs involved with inactivity
- Cost can also manifest itself in the shape of lower fund performance
and there is some disparity of opinion regarding the performance of
green/ethical funds
- The possible emergence of green taxes may work to environmental
investors' advantage
- The future is positive for ethical financial services
- CHAPTER 3 COMPETITOR ISSUES
- What is the potential for growth in ethical financial services?
- Ethical investments are beginning to grow in popularity and the market
for these funds is growing
- Advice on ethical matters is increasingly sought after
- Green credit cards are attracting customers
- Greencard Visa incorporates a carbon offset program
- Rabobank has formed a partnership with the WWF for its new Rabocard
offering
- Barclays has launched the world' s first carbon-neutral debit card
- Green financial institutions are developing to provide a range of
services
- Green Bank: Triodos Bank is at the forefront of the ethical banking
market
- Triodos bank dedicate funds to a range of ethical projects
- Green IFA: Barchester Green Investment
- The UK Social Investment Forum (UKSIF) is a recognised membership
network for SRI in the UK
- The Retail Revolution programme represents UKSIF' s effort to help
the ethical investment space grow
- Green insurance focuses on offsetting the adverse effects of car and air
travel
- Climatesure claims to tackle climate change at no extra cost
- Ecoinsurance is the Co-Operative' s first foray into green car insurance
- Green fund investment remains the key focus for ethical financial
services
- Green Century Funds offer a variety of environmentally-responsible
mutual funds
- The Ethical Funds Company are the first to offer socially responsible
mutual funds to Canadian clients
- Henderson is one global investment firm that recognizes the potential
of socially responsible investment
- Industries of the Future Fund
- Standard Life is one example of a leading UK assurance company
offering ethical funds
- The Old Mutual ethical fund is one of the top ten ethical fund
performers in the UK market
- Aberdeen is a top investment management company offering ethical fund
propositions
- Data
- CHAPTER 4 APPENDIX
- SPP writing team
- List of Tables
- Table 1: Total SRI market value by country, split between core and
broad strategies, as of December 31, 2005
- Table 2: Typical weighting of different ethical issues in a Henderson
Industries of the Future fund
- List of Figures
- Figure 1: Carbon neutrality represents a point of environmental
equilibrium
- Figure 2: Turning off computers saves energy, but computers themselves
can also be recycled
- Figure 3: Just one example of the way office materials such as ink
cartridges can be recycled
- Figure 4: The UK has the largest total SRI market value, followed by
Belgium & the Netherlands
- Figure 5: The new Greencard Visa offering
- Figure 6: The Triodos Bank logo
- Figure 7: Company logo for Barchester Green Investment
- Figure 8: Phase 1 of the "Retail Revolution" seeks to promote ethical
investment through co-coordinated events
- Figure 9: Phase 2 of the "Retail Revolution" focuses on advisor
guidelines and education
- Figure 10: The Climatesure company logo
- Figure 11: Issues surrounding health are given the biggest weighting
in a Henderson Industries of the Future fund
- Figure 12: Henderson company logo
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