Putting money into community projects could mean the local hydro-electric turbine or a stake in the village pub – and you could get a return on your cash too
The Butchers Arms in Cumbria was saved by ethical investors, who get a 3% return after two years.
Putting money into a community project gives ethical investors the chance to do everything from cutting carbon emissions to buying a stake in the village pub.
That’s not to say they don’t want a return on their cash but they’d rather it came from this kind of venture than traditional stocks and shares.
Colin Mather is a 67-year-old retired civil engineer. He’s put £1,000 towards a 50kw hydroelectric turbine shortly to be installed on the River Esk, near Whitby. He wants his money to help cut carbon emissions, produce renewable energy and fund green energy education programmes.
“We’re right beside a river, so a hydroelectric turbine was an obvious choice,” he says. “A group of us applied for planning permission and funds and we’ve had a lot of support locally.”
It’s taken four years but the Esk Valley Community Energy Group has finally received the go-ahead to install a small-scale generator, known as an Archimedes screw. It’s an expensive project: grants and loans total £240,000, and 75 investors have ploughed in £120,000, yet it still needs to raise a further £200,000.
The group received advice and support from The Co-operative Enterprise Hub which provides training and advice on member-owned enterprises. They launched community shares (they are not listed on the stock market).
The government’s feed-in tariff (FIT) means the major energy companies will pay the investors for the energy generated that they give back to the grid (in the same way you get paid for surplus energy from solar panels on roofs). The tariff levels are guaranteed for the term of the tariff and income is index-linked.
The Esk Valley investors can expect a 5% return after five years and will have made back their money in 20 years.
By that time the turbine will have cut 3,000 tons of carbon emissions. The money, over and above what goes to shareholders, will provide grants for insulating homes and fund a green energy apprenticeship.
Community shares are considered an entry-level ethical investment, because it’s possible to put in as little as £200.
Mather says: “The returns won’t be bad; it’s a fairly safe investment. But it is about more than income. I want to help our community tackle global issues. I see the project as a way to invest ethically.”
It can even improve your own lifestyle, says Kitty Smith, a hairdresser from Crosby Ravensworth, in Cumbria. When her local pub, the Butchers Arms, closed last year residents rallied round and registered as a cooperative. In just three months 300 people piled in between £250-£20,000, to raise the £300,000 needed to reopen its doors.
The village bought it for £255,000 in March; they re-wired and redecorated and appointed a landlord. Investors will get a 3% return after two years, which will rise once the rent increases. Says Smith: “Saving the pub means we get to drink in the place that we own a share of, and we keep a vital meeting place open for the community as well as getting an income on our investment.”
An alternative to this type of investment would be to put relatively small amounts in a cash Isa with Ecology building society, Triodos bank or the Co-operative bank, suggests Olivia Bowen, a director of the Gaeia Partnership, which advises on ethical investments. She says it’s something that a wider range of investors wants to do.
For those with less than £5,000, Bowen suggests a monthly or lump sum in a cautious with-profit fund with a mutual friendly society such as Sheffield Mutual or Healthy Investment. “Those with over £5,000 may go into an investment ISA, in an ethically screened open-ended investment company (OEIC) or one with a sustainability focus.”
Next on the scale would be investing £10,000 or so into funds like the Goldfield Solar EIS fund, says Mark Hoskin, managing partner of advisers Holden & Partners. It invests in solar panels on residential roofs and receives the feed-in tariff. Higher net-worth investors can utilise a wider portfolio of OEICS such as clean energy and environmental technology, held within Isas or bonds.
Hoskin suggests checking how ethical funds perform on Worldwiseinvestor.com, which his firm developed. It should also debunk the myth that ethical investments don’t perform well, claims Penny Shepherd, chief executive of UKSIF, the sustainable investment and finance association. “Stock market investments are intended for the long term and certain fund managers have performed very well for ethical investors,” she points out.
Of course, everyone’s ethics differ and so do the investments. For example, some people refuse to invest in China because of its human rights record, while others think it’s better to form a dialogue.
Ruth Whitehead, of advisers Ruth Whitehead Associates, says: “An investment is about making money: we need to provide an income for ourselves in retirement and it’s a tough market out there for non-ethical funds, as well as ethical. Invest well in ways that represent your ethics, but aren’t too restricted by them, and you’ll get a better return on your money that you can then spend in ethical ways of your choice.”
WHAT MAKES THE DIFFERENCE
Research released last week to coincide with National Ethical Investment Week reveals that 42% of British adults with investments want to “make money and make a difference”, with over one in three wanting at least a quarter of their investments to include green and ethical considerations.
A further one in 10 wants green and ethical considerations in a smaller proportion of their investments. An example of which is Peter Wooster, a 60-year-old director from Kent, who has money in funds that invest in solar power and waste management.
“I don’t consider myself to be an ethical investor, as such,” he says: “I don’t invest in tobacco or arms but other than that, the funds respond to longer-term trends affecting the UK, as well as the global market; many happen to address issues like the energy crisis.”
Author: Joanne O’Connell
Photography: Stuart Walker
Source: The Guardian