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Impax Intelligence – Environmental markets: strengthening drivers and new catalysts

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Impax Asset Management

After a year of confounded expectations, making predictions for 2017 may seem like a fool’s errand.  But it is the job of investment managers to anticipate the future – and supported by a range of positive developments – we believe that the environmental markets investment thesis remains attractive.

Although the next US President has appointed a climate change sceptic to the post of senior environmental regulator, a Trump administration is likely to be positive for many environmental markets.  And, taking a wider view, the global trends that underpin businesses that provide solutions to environmental problems continue to gather momentum.

The macro-economic backdrop

The fiscal context is shifting from austerity to stimulus, with support for infrastructure investment expected from a Trump administration, as well as in countries such as the UK, Japan and Canada.  Smaller firms carrying low levels of debt, as is typically the case in environmental markets, also look well positioned to out-perform the broader global equity market if interest rates rise.                          

Potential upside from infrastructure spending

Increased infrastructure spending promises to boost key environmental market sectors, namely water and waste water infrastructure and technology, environmental testing and environmental consultancies.  These companies account for a far larger share of our investment portfolios than the US-based renewables firms that are most exposed to an uncertain fossil energy friendly policy.  But even here, we believe the downside has been overplayed.  Much support for renewables in the US is at the state level, while key federal tax credits for wind and solar were extended just 12 months ago, with substantial Republican support.  Perhaps most importantly, the increasingly attractive economics of onshore wind and solar means that they can continue to compete with coal- and natural gas-fired power generation.

International climate action on course

The mood at the COP22 climate conference in Marrakesh was defiantly optimistic.  The response from the international community to Trump’s pre-election threat to “cancel” the 2015 Paris Climate Agreement has been to redouble support for the climate treaty, with China, crucially, reiterating its commitment to addressing climate change.  A number of factors explain this mood of determination. First, the science of climate change has become increasingly compelling.  Second, the economic opportunity presented by the low-carbon transition is becoming increasingly attractive.  Third, the related problem of local air pollution in many developing countries provides a persuasive reason to curb fossil fuel use.

In addition, we remain bullish on renewable energy project investment in Europe, with wind and solar farms offering long-term, inflation-linked returns.  In 2017 we expect finalisation of the European Union’s latest directives on energy and climate that target by 2030 the cutting of greenhouse gas emissions by 40% (on 1990 levels), improving renewable energy production by at least 27%, and increasing energy savings by 27%.

Sustainable real estate is also generating opportunities, with tenants and buyers increasingly seeking assets with high environmental standards – and lower running costs.

Hedging risk and accessing upside  

We believe that the environmental markets sector will continue to offer investors the flexibility, diversity and resilience both to deliver growth and hedge against emerging environmental risks.  By taking an active approach to investing in these dynamic markets, the thesis applies as much in uncertain times as in more benign conditions.

ian-simmThe author Ian Simm is the Founder and Chief Executive of Impax Asset Management Group plc.  Ian has been responsible for building the company since its launch in 1998, and continues to head the listed equities and real assets investment committees. 

Prior to Impax, Ian was an engagement manager at McKinsey & Company advising clients on resource efficiency issues.  In 2013 he was appointed by the Secretary of State (Senior Minister) for Business, Innovation and Skills as a member of the Natural Environment Research Council (NERC), the UK’s leading funding agency for environmental science.  He has a first class honours degree in physics from Cambridge University and a Master’s in Public Administration from Harvard University

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Ways Green Preppers Are Trying to Protect their Privacy

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Environmental activists are not given the admiration that they deserve. A recent poll by Gallup found that a whopping 32% of Americans still doubt the existence of global warming. The government’s attitude is even worse.

Many global warming activists and green preppers have raised the alarm bell on climate change over the past few years. Government officials have taken notice and begun tracking their activity online. Even former National Guard officers have admitted that green preppers and climate activists are being targeted for terrorist watchlists.

Of course, the extent of their surveillance depends on the context of activism. People that make benign claims about climate change are unlikely to end up on a watchlist, although it is possible if they make allusions to their disdain of the government. However, even the most pacifistic and well intentioned environmental activists may unwittingly trigger some algorithm and be on the wrong side of a criminal investigation.

How could something like this happen? Here are some possibilities:

  • They could share a post on social media from a climate extremist group or another individual on the climate watchlist.
  • They could overly politicize their social media content, such as being highly critical of the president.
  • They could use figures of speech that may be misinterpreted as threats.
  • They might praise the goals of a climate change extremist organization that as previously resorted to violence, even if they don’t condone the actual means.

Preppers and environmental activists must do everything in their power to protect their privacy. Failing to do so could cost them their reputation, future career opportunities or even their freedom. Here are some ways that they are contacting themselves.

Living Off the Grid and Only Venturing to Civilization for Online Use

The more digital footprints you leave behind, the greater attention you draw. People that hold controversial views on environmentalism or doomsday prepping must minimize their digital paper trail.

Living off the grid is probably the best way to protect your privacy. You can make occasional trips to town to use the Wi-Fi and stock up on supplies.

Know the Surveillance Policies of Public Wi-Fi Providers

Using Wi-Fi away from your home can be a good way to protect your privacy.However, choosing the right public Wi-Fi providers is going to be very important.

Keep in mind that some corporate coffee shops such a Starbucks can store tapes for up to 60 days. Mom and pop businesses don’t have the technology nor the interest to store them that long. They generally store tips for only 24 hours and delete them afterwards. This gives you a good window of opportunity to post your thoughts on climate change without being detected.

Always use a VPN with a No Logging Policy

Using a VPN is one of the best ways to protect your online privacy. However, some of these providers do a much better job than others. What is a VPN and what should you look for when choosing one? Here are some things to look for when making a selection:

  • Make sure they are based in a country that has strict laws on protecting user privacy. VPNs that are based out of Switzerland, Panama for the British Virgin Islands are always good bets.
  • Look for VPN that has a strict no logging policy. Some VPNs will actually track the websites that you visit, which almost entirely defeats the purpose. Most obviously much better than this, but many also track Your connections and logging data. You want to use a VPN that doesn’t keep any logs at all.
  • Try to choose a VPN that has an Internet kill switch. This means that all content will stop serving if your VPN connection drops, which prevents your personal data from leaking out of the VPN tunnel.

You will be much safer if you use a high-quality VPN consistently, especially if you have controversial views on climate related issues or doomsday prepping.

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How Going Green Can Save Your Business Thousands

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Running a company isn’t easy. From reporting wages in an efficient way to meeting deadlines and targets, there’s always something to think about – with green business ideas giving entrepreneurs something extra to ponder. While environmental issues may not be at the forefront of your mind right now, it could save your business thousands, so let’s delve deeper into this issue.

Small waste adds up over time

A computer left on overnight might not seem like the end of the world, right? Sure, it’s a rather minor issue compared to losing a client or being refused a loan – but small waste adds up over time. Conserving energy is an effective money saver, so to hold onto that hard-earned cash, try to:

  • Turn all electrical gadgets off at the socket rather than leaving them on standby as the latter can crank up your energy bill without you even realizing.
  • Switch all lights off when you exit a room and try switching to halogen incandescent light bulbs, compact fluorescent lamps or light emitting diodes as these can use up to 80 per cent less energy than traditional incandescent and are therefore more efficient.
  • Replace outdated appliances with their greener counterparts. Energy Star appliances have labels which help you to understand their energy requirements over time.
  • Draught-proof your premises as sealing up leaks could slash your energy bills by 30 per cent.

Going electronic has significant benefits

If you don’t want to be buried under a mountain of paperwork, why not opt for digital documents instead of printing everything out? Not only will this save a lot of money on paper and ink but it will also conserve energy and help protect the planet. You may even be entitled to one of the many tax breaks and grants issued to organizations committed to achieving their environmental goals. This is particularly good news for start-ups with limited funds as the Environment Protection Agency (EPA) is keen to support companies opening up their company in a green manner.

Of course, if you’re used to handing out brochures and leaflets at every company meeting or printing out newsletters whenever you get the chance, going electronic may be a challenge – but here are some things you can try:

  • Using PowerPoint presentations not printouts
  • Communicating via instant messenger apps or email
  • Using financial software to manage your books
  • Downloading accounting software to keep track of figures
  • Arranging digital feedback and review forms
  • Making the most of Google Docs

Going green can help you to make money too

Going green and environmental stability is big news at the moment with many companies doing their bit for the environment. While implementing eco-friendly strategies will certainly save you money, reducing your carbon footprint could also make you a few bucks too. How? Well, consumers care about what brands are doing more than ever before, with many deliberately siding with those who are implementing green policies. Essentially, doing your bit for the environment is a PR dream as it allows you to talk about what everyone wants to hear.

Going green can certainly save your money but it should also improve your reputation too and give you a platform to promote your business.

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