Whether it’s climate change, renewable energy or water scarcity, we all have areas we want to invest in – but it’s not always possible to hit that sweet spot straight away. Suzanne Biegel writes about the investment bullseye, and why aiming slightly off-centre is not always such a bad thing.
As I speak to more investors who want to use their capital for impact with a return, through my work at ClearlySo, one question keeps coming up: how do I focus on one area of impact and make real change there? This makes sense to me – when you have a cause you are committed to, why not focus your philanthropy and investing on tackling it?
For a climate change-focused investor, investing in a company like Abundance Generation (in the UK) would seem to be a potential investment to consider – a bullseye for her area of focus. It’s a deal that provides a direct challenge to the problem that investor cares about.
More frequently now, there are ‘bullseye’ investment deals in almost every area of social or environmental impact – from mental health provision to financial inclusion, or enabling the movement of artisanal goods from emerging markets. There are deals, and funds, out there, and investors can choose those that work for them.
Over the past few years, and particularly through screening deals for Clearly Social Angels and Investors’ Circle, I have found that hitting the bullseye isn’t always easy. You need not only the timing to be right, but also for the investments to be in solid companies and good deals for all parties. And there’s risk in everything. Diversification matters.
Personally, I invest with a climate change lens – to mitigate it, to manage its effects, to promote more sustainable ways of living. It’s key for me that my money is used to protect and preserve natural capital and to combat the destructive effects we have on our environment and our ability to thrive on the planet.
So, I might invest into something like Abundance in my ‘bullseye’ because it is specifically about increasing the portfolio of community renewables. But then along comes a deal that is about car sharing – a way of encouraging reduced consumption.
Do I say, no, that’s too far removed from the impact I want? Or do I see the opportunity to invest in a product that responds to a market need – if I invest, and it works, my influence will be positive, and my capital may be returned at a profit, giving me the opportunity to invest in more products, more companies, and more bullseye investments. I look at a deal and say, here’s the thing I want to change – is the impact of this business related to my target? Is it going some way towards creating the world I want to see?
If I am investing along a particular theme, I need to think about what effect I want – if my ‘frame’ is climate change, what is the landscape of direct and less direct areas that are open to me as an investor? Are we talking about mitigation or adaptation? Developed markets or emerging markets? What else has to go right for that company to make its impact?
For mitigation, this might mean thinking about buildings, transport and water – three of the biggest areas of energy consumption. If I’m thinking about adaptation, I’m thinking about companies and products that will support people to live with an increasingly unpredictable climate and the after effects of climate-related incidents.
Extremis Technology, for example, creates shelters and housing for people affected by earthquakes, hurricanes and floods. It is pretty far out from my bullseye investment, but there’s a through line there – and if I feel it’s a company that has the potential to scale, and meets my other criteria for a solid start-up, it could be a smart investment.
So once I know if I want to tackle mitigation or adaptation, or whatever piece of the climate change-related market opportunities or issues I want to address, I have to think about the impact I can have personally. Is it just my capital? Or are there businesses where I can add value on a board or as an advisor?
Realistically, I have to believe that the businesses have enough traction from enough customers to really make the difference I want. So does that mean investing with the crowd – following the wisdom of others? Or does it mean looking where great potential is under capitalised, and where my experience and contact book can help catalyse further investment?
How else might I invest my capital to support the environment? One circle out from the bullseye, I could invest in a company like GnewtCargo (it delivers for logistics companies, retailers and organisations – 100% emission free) or GoCarShare. It may or may not have as much direct impact towards climate change as Abundance, but it is businesses with a strong contribution to make to a sustainable future.
So what about zooming out a little further? Then I can see the opportunity in investing in advocacy, publishing and communications, or systems change consultancies – in companies such as GreenBiz or Purpose.
Or I might do a loan for a non-profit enterprise like Carbon Tracker, or the Carbon Disclosure Project, who are telling the real story about risk and stranded assets, and creating transparency in large companies. Yes, they aren’t directly creating products that mitigate climate change, or scaling up renewable technologies, but they are having an impact that galvanises change.
My climate change investing portfolio might look something like this – one bullseye and then other investments that orbit the cause I see as key:
Yes, it can be great to invest into a company that obviously, directly influences an area about which you are passionate. But it may or may not turn out to be the thing that scales your impact most, and it can be limiting – it limits your portfolio and your power as an investor – to look only at deals that hit the centre of the bullseye.
By widening your search – on your own, or through working with partners like ClearlySo – you can aim for direct and indirect impacts, using your capital to influence the change you’re shooting for, with some diversification and, potentially, more impact in the long run.
Suzanne Biegel is senior adviser to ClearlySo. She founded Clearly Social Angels, the UK’s first impact-focused angel investing group, and Catalyst at Large, which helps to raise capital for social impact ventures and funds.
Photo: Asif Akbar via freeimages
Will Self-Driving Cars Be Better for the Environment?
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.
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 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.
New Zealand to Switch to Fully Renewable Energy by 2035
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.
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