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Economy

The sustainable investment tipping point is now

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With ethical funds recently showing greater gains over their conventional peers over the last 12 months, high net-worth investors putting an increasing portion of their wealth into sustainability, 22% of all funds invested globally having a sustainable aspect and 74% of advisers reporting requests for ethical financial advice, the tipping point has arrived.

The tipping point was popularised in a book of the same name by author Malcolm Gladwell. It describes the moment when “a previously rare phenomenon becomes rapidly and dramatically more common.”

In climate science, it describes a transition from a stable state through a potentially painful transition period to a future stable state. Boy, have we got that painful transition to look forward to.

Sustainable, responsible and ethical investment was a rare phenomenon but has gradually become more mainstream, illustrated in the figures above, as awareness of the social and environmental connections and impacts of investment become more well-known and readily understood.

Climate change, population growth, resource scarcity and environmental degradation used to be the concern of a sneered-at enclave of “sandal wearing, muesli knitting, joss stick burning, bell clapping, environMENTALISTS” (the terms and emphasis are those of many bloggers, analysts and journalists).

In reality, these Malthusian ‘doom mongers’ have been proved right, and to an extent which probably surprised and depressed even them. But now is not a time for, “I told you so.”

The social concerns of religious investors and charitable fund trustees have figured greatly in the sector, giving it an ‘ethical’ badge which focuses on excluding ‘sin stocks’ (and why not – if your faith proscribes something or your charity challenges some issue, then it would be hypocritical to invest in that thing) but it describes a small, but vital, part of the sustainable investment sector today.

While this is a bit of a generalisation, another tipping point is that a new generation of accumulating (gathering together or acquiring an increasing number or quantity of assets), environmentally-conscious, digitally-connected 40-somethings have just now entered the investor space.

This is happening just as the (again, another generalisation) environmentally-unaware and digitally-unconnected generation starts decumulating (the use of accumulated assets to fund retirement income or other income requirements).

They are demanding social and environmental issues to be considered alongside the more red blooded and essential aspects of investment diversification, growth and income.

On hand to ‘help and guide’ the new generation of investors is an army of naysaying journalists, advisers and financial institutions hoping to dissuade them and encourage them to stick to the bankrupt historic model of unsustainable, irresponsible and unethical investment. The current model of investment they are wedded to is designed for yesterday’s investors, not tomorrow’s.

For these unreconstructed media, intermediaries and institutions, this shift may be fatal or at least prove to be a painful transition.

If the journalist you’re reading, person who is advising you or product literature you’ve been given, dismisses sustainability, responsibility and ethics, it’s time to change who you read, who advises you and who you buy from. Especially if you have children who will inherit the world you have created through what you invest in.

In a classic rear-guard action, the naysayers will initially dismiss the very idea of sustainability, then the evidence supporting the idea and finally the person passing on the message. They will then change the terms of the debate.

Performance was “poor”, but now that it’s better, it hasn’t been better “over the long-term”. They now say, “Look at all those funds which include ‘unethical’ stocks”, or haven’t signed up to various codes of practices, despite “claiming” to be ethical or sustainable.

We’ve seen these diversionary tactics before: over slavery, universal suffrage, civil rights, asbestos, tobacco and climate change. Incumbent industries and their subsidised friends in the media have no interest in seeing the status quo, err, ‘un-status quo-d’. He who pays the piper, and all that.

They cannot make the connections between ecology, society and economy because they never look that closely, or don’t want to understand how the systems interact.

The increasing desire to match personal values with investment value is often met with eye-rolling, patronising, weary indignation and trivial diversions.

What? You say you don’t want to screw up the planet and its people for a marginally better profit today? Tsk, how very sweet and naive. Tobacco is a perfectly good defensive stock even if it does means selling cancer sticks to poor children in Africa. It’s where the growth is (both shareholder and malignant). Pumping toxic substances into the air, land and sea may be poisoning your children but it’s a fair price to pay for an extra fraction of a per cent on your portfolio. Can you afford not to, I ask you? No, really it is worth it. Hello? Why are you walking out?

In the coming period of volatility, uncertainty, complexity and ambiguity, sustainable, responsible and ethical investment simply represents a smart diversification for the sensible and even cautious investor. Whatever investment journals and financial services say.

And let’s not forget, for all the arguments about performance, volatility and possible inconsistencies, in all societies, faiths and arts (art itself, literature, drama, music and films), it is rarely the reckless, profiteering, selfish individual who is the hero, but the responsible, generous and selfless ones. Exclude from that the dysfunctional individuals who see Gordon Gecko (Wall Street), Jim Young (Boiler Room) and Blake (Glengarry Glen Ross) as role models.

We choose not to be part of the former anti-heroes of inertia and despair, but to be part of the latter, infinitely more enlightened group. These pioneers and disruptive voices will be the future heroes of investment and innovative enterprise and we salute them.

Further reading:

35% of investors are self-proclaimed ethical investors. This is no ‘damp squib’

‘There are no moral or ethical considerations when investing’

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

There is such a thing as an unethical investment

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

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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Economy

How Going Green Can Save A Company Money

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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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