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Climate change will create investment winners and losers



Climate Week 2013 came to an end on Sunday, with over 3,000 events having taken place across the country during the seven days. Daisy Moore of responsible investment research firm EIRIS reflects on the hot topic of climate change, and explains how it links in with investment.

Around the world, climate change initiatives continue. China’s clean energy market is expanding with investment rising to over $60 billion in 2012.

California’s cap and trade scheme came into force at the beginning of this year meaning companies emitting over £25,000 tonnes CO2e now have to purchase emissions permits. This initiative is set to encourage the power, oil and industrial sectors to reduce their emissions, as well as help raise funds for the state’s budget for investing in transport, electricity and water.

A recent Ernst & Young survey of 300 executives spanning 16 countries and 18 industries found that 70% of respondents planned to increase their climate change areas such as energy efficiency and improved reporting.

In the US,’s fossil fuel divestment campaign – spearheaded by Bill McKibben – is gathering pace with Seattle mayor Mike McGinn recently announcing that city funds will no longer be invested in fossil fuel companies.

Shareholder resolutions relating to environmental and social issues are increasing year on year, including requests for disclosure on the physical risks posed by climate change, greenhouse gas (GHG) emission reduction goals and energy efficiency strategies. Meanwhile, investor initiatives to tackle climate change are growing.

The Institutional Investors Group on Climate Change (IIGCC) currently has 75 members accounting for €7.5 trillion and the UN-backed Principles for Responsible Investment (PRI) initiative now boasts over 1,000 signatories, with combined assets under management of over $30 trillion.

However this support lacks synergy with the latest news of investment in carbon intensive industries and investment in UK offshore oil and gas is at an all-time high. According to the Asset Owners Disclosure Project, the average pension fund portfolio is estimated to have 55% of its assets invested in high-carbon sectors or sectors greatly exposed to climate change.

Whilst the projected supply and demand of fossil fuels may result in higher prices, there are doubts over the valuations of fossil fuel companies as these valuations are based on their reserves.

Carbon Tracker’s Unburnable Carbon study highlights that if we are to stay within the 2 degrees of warming limit, as agreed upon by governments at COP15, 80% of these fossil fuel reserves need to stay in the ground.

Given such constraints, some have argued that fossil fuel companies are overvalued and investors risk being left with stranded assets. For example, in the UK, recent research by HSBC Global Research concluded that current earnings expectations from coal assets of the four mining majors on the London Stock Exchange could be cut by as much as 44% if it was assumed carbon constraints would come into play from 2020. As a consequence, some investors have begun to review their exposure to carbon intensive industries.

Against a backdrop of increased regulation coming into force to encourage greener energy and promote energy efficiency, and the latest climate talks in Doha resulting in governments concluding to work toward a universal climate change agreement to be adopted by 2015, high-carbon industries may come under pressure.

Obama’s recent State of the Union address indicated strong intent to “pursue a market-based solution to climate change” with or without the support of Congress. His leadership is being encouraged by other international figures, including the likes of Connie Hedegaard – EU commissioner for climate action – who are keen to secure greater international leadership from some of the world’s biggest economies.

And whilst overall investment in clean energy fell in 2012, developments to introduce cap and trade schemes and carbon taxes, such as those being suggested in China, may see fossil fuel assets come under threat.

Congress has some of the latest of political leaders who are speaking up on progress on climate change action. In this environment of pending regulatory crack down, it may prove prudent to assess investments in carbon intensive areas.

It’s clear that climate change will create clear winners and losers across the investment universe. EIRIS has developed a Climate Change Toolkit which enables investors to reduce investment risks by avoiding those companies that are failing to tackle climate change, or engaging with companies to improve their performance.

Our toolkit identifies those companies which are leading in their response to climate change and also enables investors to focus on climate change solution companies which are best placed to benefit from operating in a carbon constrained world.

If you are interested in finding out more about the responsible investment issues surrounding alternatives energy sources to fossil fuels check out our upcoming webinar on unconventional natural energy resources.

Daisy Moore is client relationship executive at responsible investment research firm EIRIS. This blog originally appeared on EIRIS’ website.

Further reading:

Sustainable investment needs to be ‘core to how we live our lives’

Do ethical funds and fossil fuels mix?

‘We need investment that prioritises long-term wellbeing for people and planet’

The Guide to Sustainable Investment 2013


How Going Green Can Save A Company Money



going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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5 Easy Things You Can Do to Make Your Home More Sustainable




sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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