2021: A Year in Review

2021: A Year in Review image

It has been an interesting 12 months with a mixture of ups and downs from the COP26 conference and a rapid growth in interest in ESG investing to the discovery of new variants of Covid and Brexit shortages.

As we are all aware, the main thing dominating news headlines as well as our daily lives has been the Coronavirus pandemic. We’ve all spent more than enough time this year discussing the virus and the damage it has caused so we’ll be brief. This year saw confusion across the country as the UK Government announced what was dubbed ‘Freedom Day’ in England with the other 3 nations maintaining stricter measures. However, we did begin to see a reduction in restrictions with freedom of movement around the country allowed again and businesses being told they could begin the return to the office. This, coupled with the vaccine rollout, led to Ethical Futures starting a phased return to the office in September. This has been going well with the majority of staff opting to come into the office for a few days a week each. This has allowed us to ensure that there is someone in the office every day. We’ve made sure that our desks are socially distanced and we wear our masks when we can’t maintain social distancing. We were aiming to begin face to face client meetings but the emergence of the Omicron variant has sadly put a halt to that. We’ll continue to review the situation to make sure that we are strictly following the Scottish Government’s current advice. Keep an eye on our blog page for updates on our current stance. 

Another item dominating the news this year was of course, COP26. Having been postponed for a year due to the pandemic, the conference was finally held in Glasgow from the 31st of October to the 12th of November. During this period, we created a social media campaign that we dubbed #12DaysofCOP where we posted on our social media every day of the conference to highlight various issues. We used the UN SDGs as a framework for our posts. If you missed it, they’re all still there on our Facebook and Twitter pages. Julian managed to make it through to two COP26 events, one corporate and one more social. He wrote his reflections on the conference hereOur marketing assistant, Marian, also got involved by volunteering with the shuttle bus team. She wrote about her experience of the conference here. They both had positive experiences of the event, but what did it achieve?  

Well, the world’s governments have finally acknowledged the detrimental effect of coal on the environment. It was agreed that coal will be ‘phased-down’. However, many were hoping that coal would instead be phased out so feel that this is not strict enough. China and the USA have agreed to work together to improve their efforts in relation to climate action. It looks like the relationship between the two countries is beginning to heal which should be beneficial for global efforts on climate action as these are two of the most polluting countries in the world. There were also pledges to cut deforestation, to reduce methane emissions and to back clean energy. The conference aimed to put in place policies and action plans that would help the world reach 1.5 degrees. It seems that after COP26, we are on track to achieve 2.4 degrees. Has it been enough? Well, only time will tell. 

Although Brexit was voted for in 2016 and we initially left the union last year, 2021 saw the trade deal officially come into force completing our exit. But what has this meant? Since the deal came into force, we have experienced what the government initially deemed ‘teething problems’. One such issue has been delays on imports leading to shortages. Many of us will have become accustomed to empty shelves in the supermarkets or empty pumps at the petrol station. According to The Independent, these delays are only getting worse. They suggest that 79% of firms who trade with France are experiencing delays which is 6% higher than last quarter. These delays are getting longer with 42% of businesses taking 2-3 extra weeks to import goods as opposed to 28% earlier in the year. We have also experienced a shortage of temporary workers and lorry drivers as EU workers’ Freedom of Movement has been revoked. The farming sector have noted difficulty in recruiting temporary workers from Europe for harvesting which could lead to further food shortages. There have also been reports of livestock being slaughtered and disposed of as there is a lack of skilled workers to butcher the meat. 

These shortages and labour issues have caused a rise in inflation. A reduction in supply has consequently resulted in increased demand which in turn has caused prices to rise. The cost of living has risen by 4.2%, the highest rate in 10 years. 

Have there been any positives to Brexit? It has been argued that the UK will now have more freedom to make trade deals with other countries without having to adhere to EU rules. This has been evidenced by the deal signed with Australia in June that eliminates tariffs on each other’s imports and exports as well as allowing Brits to obtain extended work visas. Will these trade deals be better than what the EU offered? Once again, only time will tell. 

On a more positive note, 2021 saw a cooperation agreement between the SNP and the Green Party in Scotland. The parties have stated that they are committed to helping Scotland recover from the pandemic in a greener, fairer way. Some of the policies that have been announced include; increased investment in active travel and public transport; investment in marine and off shore wind energy to help Scotland become a world leader in renewable energy; and investment in energy efficiency and renewable heating. This has been reflected in German politics. As we’re sure you are aware, Chancellor Angela Merkel has stepped down from her position and has been replaced by Olaf Scholz of the Social Democratic Party. Chancellor Scholz has created a coalition between his own party, the Greens and the Free Democratic Party. This government’s focus will be creating a fairer, more green economy while becoming more progressive. They are also aiming to divest from coal powered energy by 2030, eight years earlier than Merkel’s government. This focus on green issues and the environment from both Scotland and Germany highlights the importance of these issues. Let’s hope many more countries follow suit! 

Let’s keep going with the positive news, 2021 has seen a rapid growth in ESG investing. Although there has always been a level of demand for ethical investment, more than half of investors are now willing to consider this approach. The retail investment industry has spotted this trend and as a result there are now over 160 sustainable and ESG funds available in the UK to invest in. While previously these funds focussed on exclusions, it is now possible to find funds that have ESG fully integrated into their business practices. Which is great news for ethical investors! Women have been shown to be more interested in ESG investing than men, which we would agree with as the majority of our clients are women. The climate emergency and society’s shift to more sustainable living suggests that this trend is only going to continue leading to lots more ESG funds for investors to choose from.  

The theme of this year’s Government budgets has been ‘Building Back Better’. Westminster announced plans to help the country recover from the pandemic through measures such as increased taxation with a rise in National Insurance and Corporation Tax. For a more in depth look at what Mr Sunak’s Autumn Budget means for you and your finances, take a look at Julian’s assessment of it (click here). As of writing, the Scottish Autumn Budget is due to be announced by Finance Secretary Kate Forbes today. Ms Forbes has been allocated a bigger budget than at any point before the pandemic of £35 billion. However, she has stated that it will be tough to budget as there are many areas that need attention. It is expected that she will tackle issues such as child poverty, Scotland’s Covid recovery and the transition to Net Zero. She has already announced an increase in the Budget allocated to the NHS to assist with Covid demands as well as stating that the Caledonian McBrayne ferries under construction at Ferguson’s shipyard must be completed. With the previously mentioned cooperation agreement with the Greens and the legacy of COP26, we’re hoping for some sustainable and environment focussed announcements too.

And there you have it, 2021 wrapped up in a, hopefully, succinct manner. As we leave 2021 behind us, let’s enter 2022 with a positive mind-set so that we can seek out the opportunities that lie ahead. We hope you have an enjoyable festive season and we look forward to seeing you in the New Year. 

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