Welcome to Caledonia Wealth Management’s Blog

Here, a look at some of the many facets belonging to the world of sustainable finance.

Please feel free to submit suggestions on topics you would like to hear more about to stimulate thoughts for our future posts. 

Thanks, and please keep checking back!

The Caledonia Team

Southwest Airlines – The Green Plane

Southwest Airlines (Ticker: LUV) is implementing measures that will not only further its positioning on sustainability but will improve its efficiency and therefore its profitability.

Weight is a critical element in any aircraft and corresponds directly to flight performance, including fuel efficiency.  Over the past two years Southwest has been experimenting with a “green plane” where numerous small improvements in the design and materials used in the seats and the cabin have been tested.  The result is a lighter aircraft (by about 472 pounds) that burns less fuel (9,500 gallons less fuel per year).  Multiply this approach over Southwest’s fleet and the savings really add up.

“Considering that Southwest flies more than 3,300 flights a day an average distance of 635 miles per flight, the savings would be dramatic. Southwest calculated that it could save 90.6 million gallons of fuel and reduce carbon dioxide emissions by 1.9 billion pounds a year.”

Extrapolate those figures to the aviation industry nationwide, fuel consumption could be cut by 760 million gallons and carbon dioxide emissions by 16 billion pounds a year.

It’s easy to be cynical about the aviation industry from a sustainability standpoint.  Planes consume lots of fuel and generate large amounts of carbon dioxide.  However we at Caledonia are always excited to see sustainability and profitability complement each other.  As Southwest claims, it makes good business sense.  Expect other carriers to follow.

Pepsi – A Model for Sustainability – Part 2

In this second article highlighting the work PepsiCo is undertaking to promote sustainability, we take a look at a few of the cultural, social and management practices that have been successfully implemented within their corporate structure.  For Part 1 click here.

Workplace Policy

A critical component in evaluating companies from a financial and investment perspective is the inextricable link to the employee workforce.  Whenever we look forward at the future prospects of a firm, examining the corporate culture becomes a key indicator in what we may foresee with regard to the success or failure of a company.  An employee base  fostered by upper management to add value and creativity, and motivated around a framework providing exceptional support and career options is indicative of a healthy working environment.  PepsiCo expands its social influence both inside and outside its corporate walls through a number of initiatives that positively support this trend. 

Residential Wind Turbine Cost – Going the Way of Flat Panel TV’s?

With substantial focus on residential solar technology advances, the use of wind turbines for residential purposes has been somewhat overlooked.  The technology in this area continues to improve rapidly and is becoming a legitimate alternative for those considering solar systems or in locations where solar is less optimal and wind more prevalent.  It will also appeal to home owners looking for redundancy in their electricity generation who want to install both types of systems to subsidize a greater amount of  electricity needs from both methods of energy production.

The new Honeywell Wind Turbine from EarthTronics is an example of the

Pepsi – Becoming a Model for Sustainability – Part 1

It is always with some hesitation that I look at large corporations to investigate  sustainability initiatives and programs they are implementing within their corporate cultures.  Green and Eco-marketing has now become such an essential part of a business plan that you are sure to lose out on some market share if you don’t have a green initiative in your operations.  Separating the green-washing from practices that are genuinely implemented by firms to truly benefit communities, employees, and the environment has always been a tricky task.  It traditionally takes a lot of effort, time and energy on behalf of the company to be able to break through the first wave of skepticism in order to get the message across.

One such firm that has taken noteworthy steps is PepsiCo.  One of the world’s largest food and beverage firms, with over $39 billion in revenues and employing over 185,000 people world wide, PepsiCo has the size to effect a substantial difference not only in how it runs its operations and manages its corporate responsibility, but also as a role model for other multi-national companies facing the challenge of changing their internal controls.

Here, in part 1 I will take a look at the environmental focus PepsiCo is taking with many of its initiatives; in Part 2 examine some of the social and community based projects the company is tackling.

How Much is a Trillion?

A client recently forwarded a series of great video episodes to us from Chris Martenson, showcasing his crash course video series which can be found in it’s entirety here.  I wanted to highlight one of the chapters, which puts some perspective to the word “trillion”, and how surprisingly hard it is for most people to get a grasp of the scale of the number.  This year the US will have north of $10 trillion in debt,  forecast to approach $20 trillion by only 2015.  Numbers to keep in mind as you watch the video.

The Lost Decade

There are many economic opinions floating around out there right now.  None more so than around whether the US will follow a similar path to Japan and have a stagnating economy, or whether we will see a different set of circumstances arise in what some see as the beginning of a recovery.  This Guardian interview put some of these questions to Paul Krugman, Nobel prize winning economist, and provides a fascinating insight into not only what he sees for the future of the US but also the impact globally.  Click ‘interview‘ to read the full report.

Smart Grid Growth

Our friend Jan Schalkwijk, CFA of JPS Global Investments puts out a great newsletter on green and sustainable investing news, and in his June edition puts together a great review of the smart grid system and its future in improving energy efficiency in the US.  Click ‘Smart Grid‘ to read the full newsletter by visiting his site and reading the June edition.

Green Summit

A week ago, Boulder was host to the second annual Green Summit conference, held at  Millenium Harvest House.  Boulder delivered on its reputation as a hot bed for sustainable companies and leaders in green and clean technology, with a passionate group crowding  in attendance to learn and share about how to improve upon business practices. 

One of the most important takeaways for Colorado was seeing the revitalization of mid to large-sized firms starting to move into the Front Range.  One of the world’s largest wind turbine manufacturers, Vestas, was in attendance, presenting the large investment they have and are continuing to make in Colorado.  It is encouraging to hear that  educated, highly skilled engineers and others with technical and mechanical expertise are in high demand, and such need will drive strong employment over years to come.  In fact, it was mentioned that despite interviews for various positions  not yet started, there is already a pool of over 20,000 resumes in the Vestas database. 

Sustainable Planning Seminar

An Introduction to Sustainable Investing & How to Create a Sustainable Estate Plan 

Join us for this seminar, held with our partners at Stigler Wussow + Braverman, Ltd.

Spruce Street Mansion

1123 Spruce Street, Boulder, CO 80302

6.30pm, Tuesday June 16th

You will hear more about how Sustainable Investing is emerging as a popular approach as investors attempt to rebuild their wealth in the new economic environment.  Bennett Braverman of Stigler Wussow & Braverman, Ltd. will also talk about how best to preserve your wealth by creating an enduring, long lasting and sustainable estate plan.

This event has limited seating and all attendees must RSVP.

RSVP to (720) 239 1263.

Weekly ETF Update – China Small Cap Index (HAO)

In this weekly ETF update I wanted to take a look at one of the leading China ETF’s that is available to investors today.  While the phenomenal growth of China has been somewhat diluted by the global economic crisis, there is little sign in the near term that things are grinding to a halt.  GDP growth is expected to fall in around 6.5% this year which is only marginally below the 7.7% avearge we have seen since the early 80s.  With the SSE (Shanghai Stock Exchange) index up 52% year to date the results speak for themselves, and even though only select foreign investors can gain access to the coveted A shares there is still strong opportunities available to investors in US listed ADRs.

President Obama Announces Tougher CAFE Standards

When automakers successfully sued California, they claimed it was unfair for California to impose its own CO2 and fuel efficiency standards upon others.  One strong argument was there should be a single national standard.  Well, today Obama granted this wish.  And ironically, the standards are tougher than those California tried to enact.

So where are the lawsuits and lobbyists now?  In the wake of congressional hearings and collapsing financials, Detroit’s swashbuckling has given way to compliant thumb sucking.  They even “support” the measure (although there is little doubt they had no choice).

UN – Principles for Responsible Investing

UNPRI Principles

The United Nations, in partnership with UNEP Finance and UN Global Compact, is gaining considerable traction in the investment community for its support endorsing principles that recognize environmental, social, and governance (ESG) issues.   Launched in 2006 by the UN Secretary-General, the priniciples lay out a set of global best-practices for responsible investment.

These principles create significant influence in corporate cultures by promoting good corporate citizenship as well as building a more sustainable global economy, all backed by trillions of dollars of institutional money  now flowing into this space, and in turn rewarding participating companies’ bottom lines.  With a rapidly growing view from institutional and individual investors that ESG factors can positively affect the performance of investment portfolios, firms wishing to succeed in the new global economy will face significant  decisions concerning their level of integration and participation.

The concern for many companies is that if they do not act soon and embrace significant cultural, manufacturing and environmental changes, they may fall behind the curve in attracting investment dollars compared to peers who take a more active participation role.

Read the full UN document here:  www.unpri.org

“The Worst Is Yet to Come”: If You’re Not Petrified, You’re Not Paying Attention

This attention grabbing headline was featured on Yahoo! Finance today and featured an interview with Howard Davidowitz, chairman of Davidowitz and Associates.  While much of Davidowitz commentary is extreme and over-hyped, he is an expert in the retail industry and provides some good insights as it relates to the consumer markets.

Money and Social Rejection

Money and Social Rejection

Behavioural Finance has always been a fascinating subject within the industry and drives an enormous amount of social, as well as economic, events.  Money affects people on many different emotional levels,  ranging from physical and mental stress of trying to “keep up with the Joneses” to feelings of confidence and strength when assets are plentiful.

Nature recently published an article which explored how the mere thought of money can have remarkable effects, such as  pain reduction during certain laboratory tests, as or preventing lowered self-esteem when social exclusion settings are presented to test candidates.

While no one should conclude that money will result in any form of happiness, it does provide an interesting insight into how modern societies and psychologies have become so intertwined.   In a time of global financial investment performance, job losses and net worth erosion, any additional tools that can help those get through these difficult times is worthy of attention.

From Autobahn to Velobahn

Schritt Tempo: Walking Speed

Practically every community and housing development since WWII  has been designed around the automobile.  The post war dream of a car (or two) in every garage has been established as a sign of progress and prosperity.  So deeply ingrained is this notion,  most most U.S. cities have zoning laws  actually requiring that every residence be provided two parking spaces.

Today’s changing ideals beg the question, however: can “smart planning” separate suburbia from the SUV? Elisabeth Rosenthal wrote an interesting article in The New York Times recently about Vauban, Germany, where residents have largely given up their cars altogether.