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FTSE Russell Reveal Green Revenue Model

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FTSE Russell have launched a brand new data model which tracks and measures companies that generate green revenues. The LCE data model currently measures the green revenue of over 13,000 public companies worldwide. The global index and data provider’s LCE data model will make it easier for investors to accurately identify businesses that are contributing the world’s transition into a green economy.

FTSE Russell’s LCE data model measures the green revenues of 13,400 public companies, representing 98.5% of total global market capitalisation. Revenues from a broad range of large, mid and small capitalisation companies in 48 developed and emerging markets are mapped to 60 new green industrial subsectors, with FTSE Russell assigning each company in the model a low carbon industrial indicator (LOWCII) factor, representing the ratio of its green revenues to its total revenues.

Existing sustainability models are limited to tracking traditional ESG measures or focus on excluding hydrocarbon producers or heavy CO2 emitters from portfolios. FTSE Russell’s Green Revenues framework, based on the LCE data model, allows users to track revenues from goods, products and services that help the world to adapt to, mitigate or remediate the impact of climate change, resource depletion or environmental erosion.

More than 2,400 public companies in the LCE data model already generate green revenues from one or more of the 60 green industries. The model shows large cap companies increasingly involved in the delivery of green goods, products and services. Analysis of the FTSE Global Equity Index Series (FTSE GEIS) shows that nearly 7.2% ($2.9 trillion) of the index value is derived from green revenues, compared to 8.3% ($3.5 trillion) from Emerging Markets. Of the 7,711 companies in FTSE GEIS, more than 1,880, or 24%, already have some exposure to green revenues, and this has been increasing steadily over the last seven years.

FTSE Russell has developed a Green Revenues Index Series based on the new LCE data model, which is designed to provide investors with indexes capturing managed exposure to companies engaged in the transition on a country, regional or global basis. The initial ten indexes will cover the key FTSE and Russell universes, including the Russell 1000® and 2000®; the FTSE All World, developed and emerging indexes; the FTSE All Share in the UK; and the FTSE China Index Series. The indexes will also provide the basis for a series of exchange-traded products.

By incorporating this measure of green revenue exposure, FTSE Russell’s framework provides the first complete picture of the scale and velocity of the structural shift to a green economy across public companies. The model provides the missing dimension of the green transition, providing portfolio managers, research analysts and product managers with consistent, transparent data to track green revenue exposure and support their investment in companies that stand to benefit from the increasing shift in the global economy.

The new indexes complement the pioneering FTSE Environmental Markets Index Series which FTSE launched in 2008 in partnership with Impax Asset Management. Impax will continue to support FTSE Russell as an expert partner advising on the new and expanded service capability.

Mark Makepeace, Chief Executive of FTSE Russell, said: “FTSE Russell has long been a pioneer in the development of ESG benchmarking tools. As such, we identified a significant gap in the ability of portfolio managers to track exposure to the increasing shift towards a green economy. We calculate that the green opportunity is equitable in size to emerging markets and the launch of our green revenue data model, and related indexes, provides the missing piece for investors, with a framework that captures the full picture of their green revenue exposure for the first time.”

Christiana Figueres, Executive Secretary of UN Framework Convention on Climate Change (UNFCCC) said: “FTSE Russell’s Green Revenues Index Series and data model offers a unique and potentially powerful new way of assisting investors switch capital towards companies walking the talk in terms of green products, goods and services. The long term success of the Paris climate agreement will hinge on the greening of trillions of dollars of investment over the coming years and decades. Initiatives like this can, if widely used, play a real role in assisting asset managers and owners to accelerate the necessary transition to a green economy.”

Jack Ehnes, Chief Executive Officer of CalSTRS and Chairman of the FTSE Environmental Markets Committee said: “As long term investors, it’s critical for pension plans like CalSTRS to understand the implications of major macroeconomic changes to our portfolio of investments. The industrial make-up of the global economy is shifting as companies develop new products that provide solutions to the environmental challenges such as climate change. The new LCE dataset is an important aspect as it provides the ability to measure and understand these changes at a company or a portfolio level.”

Mark Zinkula, Chief Executive Officer of Legal & General Investment Management, said: “It is vital that investors are aware of the shift that is taking place, in relation to the transition to a green economy, and are able to measure and capture this opportunity. FTSE Russell’s new indexes and data model allows us to do this on a global scale, helping to provide investment solutions that are suited to the needs of long term investors. This includes the opportunity to support companies whose products and services tackle the global environmental and climate challenges.”

Ian Simm, Chief Executive of Impax Asset Management said: “The LCE data model is a very welcome addition to the analytical tools available to investors seeking to understand the landscape and trends of the rapidly expanding green economy. Impax has been analysing green revenues and investing in high potential companies providing solutions to environmental problems since 1998, and we’re delighted to be extending our long-term partnership with FTSE Russell in this area.”

Environment

These 5 Green Office Mistakes Are Costing You Money

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eco-friendly green offices
Shutterstock Licensed Photo - By Stokkete | https://www.shutterstock.com/g/cyano

The sudden interest in green business is very encouraging. According to recent reports, 42% of all companies have rated sustainability as an important element of their business. Unfortunately, the focus on sustainability will only last if companies can find ways to use it to boost their ROI.

Many businesses get so caught up in being socially conscious that they hope the financial aspect of it takes care of itself. The good news is that there are plenty of ways to go green and boost your net income at the same time.

Here are some important mistakes that you will want to avoid.

Only implementing sustainability on micro-scale

The biggest reason that brands are going green is to improve their optics with their customers. Too many businesses are making very minor changes, such as processing paperwork online and calling themselves green.

Customers have become wary of these types of companies. If you want to earn their business, you are going to need to go all the way. Bring in a green business consultant and make every feasible change to demonstrate that you are a green organization from top to bottom.

Not prioritizing investments by long-term ROI

It isn’t realistic to build an entirely green organization overnight. You will need to allocate your capital wisely.

Before investing in any green assets or services, you should always conduct a long-term cost benefit analysis. The initial investment for some green services may be over $20,000. If they don’t shave your cost by at least $3,000 a year, they probably aren’t worth the investment.

Determine which green investments will have the best pay off over the next 10 years. Make these investments before anything else. Then compare your options within each of those categories.

Implementing green changes without a plan

Effective, long-term planning is the key to business success. This principle needs to be applied to green organizations as well.

Before implementing a green strategy, you must answer the following questions:

  • How will I communicate my green business philosophy to my customers?
  • How will running a green business affect my revenue stream?
  • How will adopting green business strategies change my monthly expenses? Will they increase or decrease them?
  • How will my company finance green upgrades and other investments?

The biggest mistake that too many green businesses make is being overly optimistic with these forecasts. Take the time to collect objective data and make your decisions accordingly. This will help you run a much more profitable green business.

Not considering the benefits of green printing

Too many companies believe that going paperless is the only way to run a green organization. Unfortunately, going 100% paperless it’s not feasible for most companies.

Rather than aim for an unrealistic goal, consider the option of using a more environmentally friendly printer. It won’t be perfect, but it will be better than the alternative.

According to experts from Doranix, environmental printers have several benefits:

  • They can process paper that has been completely recycled.
  • They consume less energy than traditional printers.
  • They use ink that is more environmentally friendly.

You want to take a look at different green printers and compare them. You’ll find that some will meet your needs as a green business.

Poorly communicating your green business strategy to customers

Brand positioning doesn’t happen on its own. If you want to run a successful green business, you must communicate your message to customers as clearly as possible. You must also avoid the appearance that you are patronizing them.

The best approach is to be clear when you were first making the change. I’ll make an announcement about your company‘s commitment to sustainability.

You also want to reinforce this message overtime by using green labels on all of your products. You don’t have to be blatant with your messaging at this stage. Simply provide a small, daily reminder on your products and invoices.

Finally, it is a good idea to participate in green business seminars and other events. If your community has a local Green Chamber of Commerce, you should consider joining as well.

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Energy

Responsible Energy Investments Could Solve Retirement Funding Crisis

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Energy Investments
Shutterstock / By Sergey Nivens | https://www.shutterstock.com/g/nivens

Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.

Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?

Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.

Tip #1: Focus & Determination

Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.

Tip #2: Minimize Spending

One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!

Tip #3: Visualize Your Goal

You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.

Investing in Clean Energy

One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.

With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.

The Future of Green Biz

As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.

Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.

In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!

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