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Economy

The sole purpose of investment is profit. All other considerations are secondary

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In a recent debate at a team get-together, Blue & Green Tomorrow’s founder and publisher Simon Leadbetter was asked to adopt the role of a red-in-tooth-and-claw, unfettered investor. With 18 years’ experience in financial services, he has worked with people whose profit-at-any-cost mentality would make Gordon Gekko proud. This was the argument he made on their behalf.

Note: Before you read on, we would like to point out that this isn’t a true reflection of our publisher’s view, but he knows people who hold it in entirety, or even more extreme versions. That said, as a former amateur dramatist, he can speak the lines that others write and has heard all of the arguments here.

The maximisation of profit maximises tax revenue for governments, increases consumer choice through competition and creates greater employment opportunities for society. With this profit, our citizens, communities, companies and countries can invest and prosper.

The business of business is ‘business within the law’ – and not charity. In fact, if more charities acted like businesses, rather than wearing the hair shirts they do, they’d probably be able to do more good as they would be significantly more efficient and raise greater sums of money.

The business of investors is ‘legal profit’, not morality. Yes, external factors that threaten a business (commercially or reputationally) or reduce its profit (such as resource inefficiency) should be driven out by good strategic leadership, relentlessly pushed by highly active shareholders and investors.

But, indulging the pet projects of non-owner business leaders, whose tenure is often fleeting at best, is unwise.

One chief executive may have a great plan that then diverts internal time and money, and ultimately harms profits, leading to redundancies and bankruptcy. So many corporate social responsibility (CSR) programmes which are effectively greenwash expose the business to more risk from consumer vigilantes and diverts management from the task of maximising profit.

What is legal is investable

“But, but, but – what about ethics, responsibility and sustainability?” What of them? What is legal is investable. To think or behave otherwise probably means you’re a hypocrite or worse.

If society, through its elected representatives, has decided an activity is legal, then you should be able to invest in it. By all means, campaign to ban cigarettes, ban alcohol, ban gambling, ban pornography, ban cars, ban everything in fact – and then we won’t be able to invest in it.

Last time I looked, smoking, drinking, gambling, porn and driving are legal and to participate in those activities but refusing to invest in them renders you a hypocrite. Society, not investors, needs to decide what is legal and what isn’t.

Slavery wasn’t abolished because a few Quaker investors divested, but because slavery became unacceptable and then illegal, after decades of painstaking parliamentary debate. No one really cared about the Quakers’ divestment, as it just meant there was more opportunity for those that remained, and who then moved their investment once the trade was banned.

Blaming investors and investment bankers for the world’s ills is tremendous fun and a great diversionary tactic for not addressing failures and inconsistencies closer to home, our own lifestyles and the politicians we have voted for. We are focusing on the wrong things if we attack investors and investment.

In the developed world, we are more informed and powerful than we have ever been. Firstly, we have access to all of the world’s information online. Secondly, as consumers we vote in favour of a thing through the trillions of daily transactions and clicks. Thirdly, we vote as investors by what we invest in. Finally, as electors it matters how we actually vote in elections. If you choose to be uninformed or don’t ‘vote’ in any of the last three, you don’t count.

The myth of the impotent, down-trodden citizen is a convenient excuse for those who are incapable of getting an aspirational and positive message across for their own misguided cause.

It’s also quite insulting to those who really do live in oppressive regimes where you have no choice on what you read, buy, invest in or vote for. For them, the promise of inward investment from our supposedly ‘broken system’ and securing some of the freedoms we take for granted might actually be their only glimmer of hope.

Finger-pointing environmentalists often have fossil fuel guzzling cars, fly to their eco-retreats and voluntourism breaks, bank with the big five banks, use the big six energy firms and live otherwise unsustainable lives, while campaigning for a return to a non-existent idyllic past. How you hold so many inconsistent positions in your head is alien to me.

Without the wealth creation of capitalism, life really was nasty, brutish and short for everyone but the very, very rich.

Do we really want politicians to tell us what we can or can’t invest in?

The heavy hand of government is the worst picker of winning industries; investors are much better, because they sift and analyse countries, companies and funds every single day.

Some Whitehall bureaucrat or short-lived political pole climber is the wrong person to choose a winner. It is those down in the dirt, risking their own money and creating tomorrow’s companies and industries who pick the real winners and move society forward and upwards.

A significant number of politicians are demagogues, vain, amateur meddlers and for sale – or all of the above. They collude with vested interests and monopolies, appoint their mates, subsidise favourite groups and queer the competitive pitch.

It’s not the fault or role of investors to address that democratic deficit, but the role of electorates. As long as we are investing within the rules our democracy dictates.

Yes, governments need to create a level competitive playing field but then they need to let the unruly hordes of investors and consumers decide.

Trust the wisdom of the market and its boisterous crowds, and everyone in society gains

Property rights can protect the environment, carbon markets can drive down emissions, genuinely competitive markets and mobile workforces can create real consumer choice and model employers. Sustainable prosperity comes from the wealth creators, not wealth takers like governments.

If you want to do ‘good’, join a charity or party or vote for a party that promises the reform you want. Convince us to vote for a change in the law on what is legal and what is not. In the meantime, investment profit maximisation within the law is ‘good’.

Further reading:

‘It’s not my job’ to be responsible

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

Climate sceptics are our generation’s slavery apologists

Sustainable investment is about optimisation, not maximisation

Do you know what your money is doing while you sleep?

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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