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One day soon, we hope all investment will be sustainable, responsible and ethical – before it is too late

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Whatever you call it – sustainable investment, responsible investment or ethical investment – the challenge for 2014 is not how to make niche funds mainstream, but how to make mainstream funds sustainable, responsible and ethical.

Financial trade outstrips all other trade 26:1. More than any other human activity, what we invest in shapes the world we live in. Financial centres determine the price of everything from your morning coffee to what you need to have accumulated in assets to afford a comfortable retirement. Supposedly sovereign countries are all provincial regions of the United States of Capital.

A significant portion of financial trade does not even have human oversight, as high speed trading attempts to gain advantage faster than we can conceivably compute. The effect on individuals, communities, countries and the environment have no influence on, or stake in, this automated trading. Profit maximisation is the only priority.

Specialist sustainable and ethical funds do a lot of the heavy lifting in providing capital for ventures addressing global issues – of between £9-22 billion depending on how you define the market. That’s between 1.2% and 2.9% of funds under management in the UK (£763 billion). To effect the required change globally we need between 10% and 30% to be invested sustainably. That’s £76-229 billion. It feels like an impossible goal.

Companies that are providing clean energy, clean water, clean industry alongside sustainable, resource-light supply chains, agriculture, forestry and fishing need investment. Social investment domestically and impact investment overseas can lift communities from depending on aid or charity to be self-sustaining. They all need investment, over charity.

This means building the hard-nosed economic case for sustainable investment for institutional investors. It means encouraging pension funds and sovereign wealth funds to commit to investment that is in the long-term interest of their pension contributors and citizens. And that includes the interests of society as a whole and the environment, as well as simply profit.

It means breaking down adviser and other intermediary resistance to discussing the sector and dispelling pervasive myths about fund performance and investor disinterest. It means reassuring private investors that sustainable investment doesn’t carry more risk, but significantly less. Climate change, overpopulation, resource scarcity and unfettered pollution are real and threaten all of us, regardless of wealth, age, gender or nationality. Arbitrary lines drawn on a map are no protection against global issues.

It means creating a regulatory environment nationally and globally that makes sustainable investment strategies the rule, rather than the exception. It means making the principles, processes and best-of-breed guidance of sector bodies such as the UN-backed Principles for Responsible Investment (PRI), the European Sustainable Investment Forum (Eurosif) and the UK Sustainable Investment and Finance Association (UKSIF) standard industry practice and adhered to. Naming and shaming those who transgress might be uncomfortable for some, but these standards cannot simply be a tick-box, public relations or greenwash exercise.

Transparency on investment strategies, all holdings, portfolio turnover, company engagement and charging structures will help clear up the opaqueness of the industry and increase investor trust. No one is perfect, but functioning markets need more equality of power between investors and investees so they can make informed choices.

The accumulation of wealth for wealth’s sake is shallow and meaningless. You cannot spend it when you are dead, and there can be nothing more shortsighted, unethical and selfish as investing in a way that reduces the life chances of future generations.

Measuring success solely on a financial scale recognises everything except that which really matters. We need investment that means prosperity for the many, not just for the few. We need investment that means we pass on a viable environment to future generations rather than degrade it. We need investment that protects and values humans, rather than exploits them.

This is not some romantic, idealistic view of what the future can be, but the commonly held view that we should be capitalism’s master, not its slave – or worse, its apologist or devotee. It has done more than any other economic system yet tested to create prosperity, but the cost has been far too high so far.

We hope that one day soon, all investment is sustainable, responsible and ethical. Unsustainable, irresponsible and unethical investment is humanity’s long defeat; its suicide note for future generations.

Join other enlightened investors and build a blue and green tomorrow, and walk away from the cold and timid souls who only ever see the virtues of wealth creation at any cost.

Further reading:

From ethics to sustainability: shifting the investment debate for 2014

The sustainable investment tipping point is now

‘There are no moral or ethical considerations when investing’

Ethical investment: better a diamond with a flaw, than a pebble without

The Guide to Sustainable Investment 2013

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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