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Triodos head of SRI: invest sustainably to ‘change the world’

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Do you know what your money is doing and is it doing good? Alex Blackburne speaks with Eric Holterhues from Triodos Investment Management about how sustainable investment can provide an answer to those crucial questions.

In 1980, a bank was formed that would go on to become a European leader in sustainable finance. Triodos Bank was set up with transparency at its heart and a very clear mission to show customers how their returns were being made.

It invests across three defined themes – the environment, society and culture – and has retail banking operations in its native Netherlands, as well as Belgium, Spain, France, Germany and the UK.

While its place as a leader in the European sustainable banking arena is well-documented, readers may be less aware of its investment arm. But it has significant weight in this area too, with 17 investment funds covering both retail and institutional investors.

Eric Holterhues is head of socially responsible investing (SRI) at Triodos Investment Management in the Netherlands. Speaking to Blue & Green Tomorrow, he recalls how a 2007 investigation that revealed a Dutch cancer foundation was, unknowingly, investing in tobacco companies had brought the need for sustainable and ethical investment into sharp focus.

Holterhues says that in the beginning, Triodos was simply a bank that used their clients’ savings to provide loans to smaller, non-listed companies – those that didn’t appear on stock exchanges. But as demand grew, it became clear that customers also wanted impact by investing in non- listed and listed companies via the investment funds provided by Triodos.

Triodos decided to start with impact investing – and the results have been impressive. Its investment arm grew 27% in 2013, with €2.5 billion (£2.07 billion) in assets under management. Holterhues says he has seen “massive traction” in the take-up of the sustainable funds on offer. These are either impact investing funds, which invest in non-listed companies,  or SRI funds, which invest in stock-listed companies.

Interface, the carpet maufacturer, is aiming to be environmentally neutral by 2020

The investment team managing the SRI funds can only invest in companies from a defined sustainability universe. It can select companies that derive more than 50% of their annual income from a sustainable product or service – such as renewable energy providers. It also looks at best-in-class firms – those who may derive less than 50% from a sustainable product or service, but are going to great lengths to be more sustainable.

Holterhues picks out carpet manufacturer Interface as a good example. It has a strategy called Interface Mission Zero and a goal to be environmentally neutral by 2020.

There is a lot of pollution in our seas, especially nylon nets that are put there by fishermen”, Holterhues explains.

Interface thought that maybe they could change this, so it is now actually paying fishermen to catch the nylon nets, which it then makes carpets out of it.”

The advantage of working with bigger firms like Interface (Dutch technology company Philips is another example) is the sheer potential for sustainable change. Because of the size of listed firms, even small steps forward can be ground-breaking.

Holterhues says, “We work closely with sustainability departments at these companies and they are actually very glad that we ask questions about their approach to sustainability. They say it gives them an opportunity to have an increasing conversation within their company. The other thing is that we also engage with these companies through their annual meetings and talk about their sustainability performances.”

Triodos’ SRI strategy seems to be paying off, too. One of its two UK-based SRI funds is benchmarked against the MSCI World Index. Comparing the two over the long run, the Triodos fund has performed better. Holterhues backs this up by pointing towards a 2012 study by Deutsche Bank, which said companies that factor sustainability into their investments perform better on the stock market and offer investors less risk.

Despite this, there is still some trepidation towards sustainable investment – particularly around risk and volatility.

I think people are unfamiliar about sustainability and there’s still this myth of it being about sustainability and not about performance”, Holterhues says.

But Triodos Bank grows around 20 to 25% every year; our SRI investment funds grew by 33% in the last year. It’s ridiculous to say that sustainability is not worthwhile, because otherwise we wouldn’t have been here since 1980.”

While the social, environmental or cultural argument is compelling, Triodos is firmly of the opinion that people want to know – at the most basic level – what their money is doing. It comes back to the reason the bank was set up in the first place all those years ago.

Holterhues concludes, “People find that very important. I also think people have a responsibility in investing. It’s not about the world changing because of others; you can change the world yourself by investing.”

Further reading:

Triodos invests in Cambridgeshire wind farm to boost renewable energy portfolio

Sustainable bank Triodos sees 20% growth in assets in 2013

Triodos expands renewable portfolio with potato packaging plant project

Triodos survey says 3m may consider social investment in next year

The Guide to Sustainable Investment 2014

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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