Keep Calm and Carry On – Social Impact Investing Post Brexit
Could social impact investing and community energy projects offer a safe haven for investors post Brexit? In the immediate aftermath of Brexit, the pound dropped to a 30-year low; UK stocks had the worst fall since the financial crisis in 2008; and high street bank shares have declined significantly. It is now likely that there will be a long period of readjustment in the UK as the negotiation process unfolds. Of course, much of the current commentary about the economic landscape of the future is blatant speculation and guess work. Some sectors of the media thrive on the idea of economic and social turmoil, not stability. This is not helpful or wise.
Community Energy Projects Prove Attractive to Investors
We need to cultivate a spirit of optimism, keep calm and carry on. Does anyone really need a reminder of the worst recession in the UK since the thirties? Let’s not talk ourselves into another one. It is a fact that financial products governed by interest rates, stock markets or currency values are likely to see change, that is normal. The picture isn’t all gloom and doom. There are always opportunities. Some savvy, ethically aware investors are turning to social impact investing as a relatively safe haven during uncertain economic times. It’s good to hear that some Ethex community energy offers were so popular, they were oversubscribed in the days following the referendum.
Read on to find the latest crop of Community Energy Investment Opportunities from Ethex – Britain’s leading ethical investment specialists.
Alison Jane Reid
The £ in your pocket
It is possible that you’ll have less money in your pocket as the drop in sterling will mean that buying goods and services outside the UK – fuel, foreign cars, food and clothing – will cost more. Overall, then, your income won’t stretch quite so far. The weaker pound will mean holidaying abroad over the coming months will also now cost you more (that’s unless you were clever enough to pay for your holiday early and buy your foreign currency before 23rd June).
Savers have suffered with rock bottom rates since the financial crisis in 2008. Rising prices might well push interest rates up. But, on the other hand, if the economy struggles to grow, the Bank of England might also embark on new rounds of quantitative easing to keep interest rates low enough to encourage growth. This will mean it will be even harder for savers to find the right opportunities to make a good return on their money. It is worth noting that in the light of some financial institutions looking at scaling back in the UK, Triodos Bank put out a statement this week about their commitment to operating in the UK.
Stocks & shares
There is going to be a period of uncertainty while markets adjust and companies work out how to respond. Shares typically rise with company profits: companies that are net exporters might benefit from the weaker pound so the value of shares will rise, while net importers might well see profits squeezed.
Is there a safe haven?
Non-traditional investment products offer an alternative opportunity in this climate. With the benefit of returns forecasted from 5 to 7%, much higher than many savings accounts, UK-based community energy share and bond offers could offer a relatively safe haven in a stormy environment. Returns are based on the sale of electricity generated back to the grid and from the Government Feed-in Tariff (FiT) scheme, giving projects fairly predictable long-term cash flows. It is worth noting that the organisations listing products on Ethex have all pre-accredited their schemes with OFGEM last September. This means that tariffs are then fixed for the lifetime of the project, are index-linked, and not affected by further changes to the FiT rate. With the possibility of rising inflation, these products could also benefit from inflation-linked incomes. And it’s worth noting that all Community Benefit Societies and some Co-operatives pay distributions in the form of interest. This means that the Personal Savings Allowance applies to a large number of the savings and investment products listed on the Ethex platform (see our blog on changes to personal finance).
It is going to be much harder to save your money and build long-term wealth: many investors are going to have to battle to harden themselves against market changes. But on the upside, with banks and currency markets in disarray there’s a possibility people might look at alternative products and diversify their portfolios.
A Rush to the Finish
Not surprisingly, investment slowed down on the day the referendum results came out on 24th June and over the ensuing weekend, but it’s now picked right back up. We’ve even had investors tell us this week that some Ethex products look very interesting in this climate. Several offers successfully closed this week and we experienced a rush to the finish line for Linton Hydro, which closed early due to over subscription. The good news is that there are still many options to choose from listed on our home page and you can help these projects become a reality.
Lisa Ashford, CEO, Ethex
Edited by Alison Jane Reid
Community energy projects currently open for investment:
Plymouth Energy Community
PEC Renewables share offer provides an opportunity to positively invest in its completed 4.1MW community solar array. Income from the scheme supports local fuel poverty programmes.
Note: 5 days left
Ferry Farm is looking for investment to help fund a 5MW community-owned solar farm near Selsey, West Sussex, currently under construction. The project will generate a community surplus of around £50,000 per year.
Note: 6 days left
Low Carbon Hub
The Ashden award-winning Low Carbon Hub is looking for investment to build a community-owned hydro scheme at Sandford lock and solar PV on schools and businesses across Oxfordshire.
Note: 13 days left
Energise Barnsley is looking for investment to bring 2MW of solar installations on social housing and community buildings in Barnsley into community ownership. The scheme has already saved over £10,496 collective savings from tenants on electricity.
Note: 22 days left
BHESCo’s second share offer is to raise finance to install renewable energy and energy efficiency measures in and around the Brighton area.
Note: 24 days left
Gawcott’s 20-year bond is to help fund a 4.17MW community solar farm at Gawcott Fields Farm, near Buckingham.
Note: 43 days left