Screen shot from Morphic Ethical Investment's IPO

The year is now in full swing. And at The Fifth Estate like everyone else in the sustainability business, we’re taking on way more than we can chew. Apparently, it’s the only way to build new synapses, which will help as the pressure on climate and environmental challenges start to buffer us about. This will look like the glory days in retrospect.

Coming up first is our Flash Forum on Housing Affordability. Then our Mad Men for the Planet in Melbourne on 31 May, at long last our first event in the Southern Belle. And sorry Sydneysiders, but Mad Men Melbourne will be way BIGGER (Trump-bigger) and thanks to NABERS, in a great venue with views onto Melbourne’s cool graffiti laden laneways.

Anyone fancy a quick trip?

There are more events on the way. Contact for details if you are interested to find out how you can be part of the most exciting gigs around.

Which brings us to another project on our books, the latest and final ebook in the Greening Your Office series, in collaboration with CitySwitch. It’s getting close to the final tweaks now, then it’s in design.

Green investment is off and running

Other sectors ramping up with excitement are investors. Fund managers, like thoroughbreds at the track, have sniffed the new fields of green and they’re racing to get the front of the pack as consumers increasingly understand that they can put their savings into an ever bigger pot of environmentally clean and ethical products.

AustralianEthical says it has about $2 billion under management these days and is growing at 35 per cent a year.

And on Monday BetaShares held a briefing to touch base on its new Exchange Traded Fund comprising Australia’s first global ethical equities launched in January.

The company’s managing director Alex Vynokur says it has already gathered about $45 million since launch.

The fund screens for climate leaders that are 60 per cent more carbon efficient than average and against nasties such as fossil fuels, gambling, tobacco, armaments and so on.

Leading discussion alongside Vynokur as special guest was Dr John Hewson.

Hewson is famous around the traps for his support of climate change initiatives in the investment space and the Asset owners Disclosure Project, which he chairs. This, together with his former role as leader of the Liberal Party means he carries clout across on both sides of the political divide.

John Hewson at the BetaShares briefing

At the briefing, Hewson homed in on one of the incontrovertible facts of human behaviour. We’re crowd pleasers and crowd followers. Social beings, to put it nicely. So when there’s a run on something, it’s because enough people start wondering what they’re missing out on.

When CalPERS, the huge Californian pension fund started earning AAA ratings from the AODP, other pension funds starting looking around and wondering why they weren’t getting a share of the glory, Hewson pointed out.

What was so powerful, he says, was simply shining a light, listing the facts, the achievement – OK, the naming and the shaming. It actually works, he said.

We’re very much in agreement with Hewson, seeing how the green building movement thrived on the competitive spirit and the desire to “get some of what they’re getting”.

That’s one of the reasons we’ve finally done a story that’s been on the To Do list for a long time. Huge thanks to Willow for taking on the meticulous, methodical task of making it happen.

It’s a list of the top 50 companies in the S&P/ASX 200 and how they perform with their tenancies.

We’ve picked NABERS tenancy ratings because that’s the measure of how they walk the walk. It’s their sweat and commitment, not that of the landlords.

Now these are the really big (Trump BIG) companies of our economy. Many of them like to live inside lovely 5 and 6 star Green Star Buildings and those with high NABERS base building ratings… and do little else but enjoy.

Quietly the people who do the hard yards for the landlords have been grumbling. The grumbles have been getting louder. Base buildings are just half the story of carbon emissions and respect for tenant rights is one thing but, sooner or later you’d like to see them actually pulling their weight.

So with all the care in the world and lots of hours, Willow has gone through and done the very simple (but not easy) thing of listing the achievements, with loud empty spaces for the rest.

Some of the big companies are doing very well indeed.

The big shopping centre behemoths in particular, have jumped out of the starting gate late but are now in a pleasing lead. Check out Vicinity which you might recall a few years ago came in from a lambasting for dreadful environmental performance. Now doing very well, thank you very much. Also Westies’ Scentre group. We were pleased to see that these bigger-than-Ben-Hur property owners are pulling their weight at long last, albeit with a particularly heavy weight to pull given the nature of their properties.

Check out the scoreboard here

Things to watch as ethical investment ramps up

As ethical investment ramps up though it will pay for ordinary folk who care about our planet and their own future to also invest in a little in education for themselves. We know the world of investment is rife with an insiders’ vibe, cabal-like language and so on but it’s actually not that complicated. A financial dictionary such as Edna Carew’s series, The Language of Money, will do wonders to empower you.

It also pays to read the plethora of free or low cost subscription advice offered by columnists in daily papers and online – you’ll soon get to know the ones that aren’t spruiking any particular product and prefer instead to spruik their own impartiality and sound advice.

One such analyst caught our attention.

It was on the topic of another investment crowd pleaser new to the market, the Morphic Ethical Fund, which launched an initial public offering in early March, now closed, with aims for $200 million under management and stock exchange listing.

The fund is backed by Westpac Bank, and is now challenging ethical fund manager Hunter Hall in its space.

Morphic Ethical has a beautiful website with lovely organic images and a mantra that says, “Change Creates Opportunity. We are seeking to identify ‘enduring’ change as opposed to fleeting change.”

The promise is to not invest in entities involved in environmental destruction, including coal and uranium mining, oil and gas, intensive animal farming and aquaculture, tobacco and alcohol, armaments, gambling and rainforest and old growth logging.

And we know that sustainable ethical screens on investment options can produce better results than those tied to coal for instance which is well on the way to becoming a stranded asset.

But as this sector builds it’s worth striking a note of caution that like every investment option there are hidden traps and the same old dangers as lurk elsewhere in the investment arena. Here’s how the analyst we spotted, in the Herald-Sun, cautioned investors to not just look at returns, but at the fees funds will take.

As an investment grump I pick up the prospectus and skip past all the pretty pictures and all the marketing guff, and go straight to the fees — since that’s the only thing in the prospectus that you can actually count on happening:

They’re charging 1.25 per cent per annum, plus a 15 per cent outperformance fee.

That’s too damn high for me.

Research from Standard and Poor’s proves that 80 per cent of fund managers can’t reliably outperform a cheap index fund over the long term.

So if I were in your shoes, I’d invest in the UBS Ethical International Fund (ASX: UBW).

It’s simple to understand — it’s an international index fund that screens out companies involved with tobacco and weapons.

How much do they charge? A low 0.35 per cent.

Mind, the analyst doesn’t say whether UBW also screens out fossil fuels and for our money that would be a must. Need to investigate.

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