Coffe Anyone?

Despite the typical, modern coffee shop’s attempts to tempt us, my coffee order is always simple – flat white, no sugar, job done. A choice of chai, pumpkin-spiced, skinny, vanilla, blonde, and the rest is wasted on me. I was nevertheless interested this week in an article about a coffee menu innovation launched in the Netherlands.

Albert Heijn, the largest Dutch supermarket chain, is piloting a pricing initiative at a number of its convenience stores. When customers buy a self-service cup of coffee, they’ll see two prices: the standard retail price and the true price. The latter factors in CO2 emissions, water use, resource consumption, and the labour conditions related to the production of the coffee and any milk added (plant based or dairy). The regular price for a double espresso is a very reasonable EUR 2.25; when priced using the True Price methodology, this increases to 2.33 for a small swig of the brown stuff. If the purchaser pays the higher cost, the additional profits are passed on to environmental charity, the Rainforest Alliance.

The additional cost per cup is relatively small and I think that people may pay up. The accumulated extra spends might raise a decent amount for the charity. Critics of the scheme point out that the retailer is passing on the hidden costs of the coffee retail trade to the end consumer, while happily still making a profit from it themselves. The information provided about espresso emissions and decaff-deforestation could however inform consumers and get them thinking about sustainability, if of course they can spare a few seconds to read it.

With everything going on in environmental / climate/ net zero news, it may seem that a coffee machine scheme in a few small stores in the Netherlands is pretty inconsequential. However, it got me thinking about lessons we can learn in the investment world. It is still relatively unusual for investors to be told about the “true price” of their investments. Over the last ten years or so, there has been increasingly stringent regulations about the detail and the frequency of information given to clients about the charges they pay. I have to disclose this in monetary terms, as a percentage, and as a reduction in returns, both before the investment commences and at least annually thereafter. In contrast, there is no obligation to tell an investor about their portfolio’s carbon emissions, how much water the companies held in their investments use or how many trees they cause to be cut down. This information is increasingly available but advisers who are choosing to obtain this and make it available to clients are in the minority.

It is expected that the industry regulator, the Financial Conduct Authority, will issue some rules in future which state that advisers must ask their clients if they want to consider sustainability in their investment decisions. I don’t if there will be a requirement to point out whether funds and savings plans clients already hold come with a big dose of environmental harm or social damage. Not all investors are seeking this kind of information, just as many Dutch coffee drinkers may not be actively seeking a carbon report at the coffee machine. However, in my experience, some simple to understand, digestible, and informative data about the ingredients of a portfolio can certainly be food for thought.

Of course, the comparison between coffee and capital only goes so far. Coffee gives you a short-term buzz, investments are for the long term. A mistake in the coffee order is mildly annoying; a mistake in an investment choice can be a life-changing disaster.  Knowledge of the true price of coffee should not affect the taste of it, whereas knowledge of the true price of an investment portfolio gives real insight into the risks the portfolio may be exposed to.

Given sustainability is ground into our finance blend at Somerset Wealth Management, I recommend investment solutions that disclose their financial, environmental, and social impacts and costs. I believe you are absolutely entitled to know whether your money is invested in companies that are working for or against the world we live in and whether your investments are aligned with a sustainable future.  I will take you carefully through a simple discussion about sustainable investment choices and, rather than asking you to pay an extra “true price” for your financial footprint, you’ll be offered solutions to make it a more positive one.

To find out more, contact me here:

*Please note that capital is at risk and these investments are designed for the long term.

For coffee to go, supermarket Albert Heijn pilots voluntary higher prices that cover hidden costs (

Photo by Nathan Dumlao on Unsplash

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