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UK Urged To Seize Brexit Opportunities To Solve Investment Crisis

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Debate On Brexit's Impact On The Environment And Climate Change

Britain’s role in solving Europe’s investment crisis has been brought into question following Britain’s vote to leave Europe, responsible investment organisation ShareAction has warned.

Investment in Europe has still not recovered from pre-financial crisis levels. Yet according to the European Investment Bank, in order to meet its climate and energy obligations, the EU must increase investment by €100 billion to fund Europe’s energy infrastructure.

Encouraging steps have been taken to respond to this deficit, with the European Commission announcing plans for a stronger focus on sustainability and the transition to a low carbon economy in its refreshed strategy on capital markets and investment. The European Union recently announced that it would re-boot the Capital Markets Union (CMU) to set up an expert group on sustainable finance. It is also boosting the European Fund for Strategic Investment and ensuring 40% of this additional investment helps to tackle climate change.

The UK has also shown promising initiative on the sustainable finance agenda, with The City of London launching a Green Finance initiative earlier this year. But Brexit has raised huge questions about the future of the City of London, its relationship with the EU single market, and European finance and investment policymaking. The City is by far the EU’s largest investment centre and is known for its innovation. Without having to adhere to EU policymaking processes and timelines, the UK has a chance to push forward with green finance innovation.

Britain’s exit from the EU presents a real opportunity for the City of London to innovate and lead the way on sustainable investment.

“Britain’s exit from the EU presents a real opportunity for the City of London to innovate and lead the way on sustainable investment. The next few years will be critical if the City wishes to consolidate its position as the green finance hub of Europe,” said Camilla de Ste Croix, Senior Policy Officer at ShareAction.

In a report launched today, a consortium of European sustainable finance organisations including ShareAction sets out a plan with further recommendations to tackle Europe’s green investment crisis. The consortium welcomes the action taken so far but calls on Europe to go further and ensure its public finance programmes are fully aligned with the EU’s climate targets and developing the green bond market. This would provide investors with the long-dated assets they need to ensure stable long term returns and reduce Europe’s pension fund deficit.

“A quiet revolution in sustainable finance is underway across the globe. With so many questions marks hanging over the future of the City, the UK should position itself boldly as a leader in the rapidly growing market for sustainable financial services. But if not properly considered, the UK risks being left behind,” de Ste Croix continues.

ShareAction is hosting an event on 11th November to debate the future of green finance in the UK and Europe in light of the referendum result. Sign up for a free place here.

Ingrid Holmes, Director of the climate and energy think tank E3G said:

“By putting sustainability at the heart of the European Union’s Capital Market Union, the Commission will maximise the potential for economic recovery and future prosperity.”

Seb Beloe, Partner, WHEB Asset Management said:

“The Capital Markets Union refresh represents a key opportunity to embed sustainability considerations at the heart of a financial architecture that is fit for the 21st Century.”

Ian Simm, Founder and Chief Executive, Impax Asset Management said:

“With its sights on the next decade, the European Union is understandably seeking to map out the path to further economic recovery while also pioneering worldwide efforts to preserve the environment. This “Sustainable Finance Plan” makes key recommendations for how to harmonise policies in these areas.”

 

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Green Tech Start-Ups: Are they the Future?

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Endless innovations are occurring in green companies, reinventing the industries they belong to. Gradually, they are beginning to amass more success and popularity. Consequently, these factors serve as a good indicator for green technology businesses, and their development must begin somewhere.

Green tech start-ups boast a wide array of opportunities for the economy and environment, while boosting recruitment openings with valuable services. While the technology industry is littered with high revenues and competition, the green tech start-ups are the clear sign of a cleaner future.

Fulfilling a Genuine Need

Many tech companies will market themselves as the ultimate tech giants to shift stock and make profit. As they all vie for attention through warped corporate rhetoric, there is only one ethical winner; the start-up green tech company.

Some argue that mainstream tech businesses have grown far too big, branching out into other industries and standing between the consumer and practically everything they do. However, green tech start-ups go beyond the shallow ambitions of a company, answering a call to sincerely help the customer and climate in any way they can. Of course, this is an attractive business model, putting customers at ease as they contribute to a humanitarian cause that is genuine through and through.

After all, empathy is a striking trait to have in business, and green tech start-ups maintain this composure by their very nature and purpose.

Creating Opportunities

Despite the pursuits for clean energy still needing more awareness, green tech is an area that is ripe for contribution and expansion. There’s no need to copy another company or be a business of cheap knockoffs; green tech start-ups can add a new voice to the economy by being fresh, fearless and entrepreneurial.

Technology is at its most useful when it breaks new ground, an awe that eco-friendly innovations have by default in their operations. Of course, green tech start-ups have the chance to build on this foundation and create harmony instead of climate crisis. Ultimately, the tech advancements are what revolutionise clean energy as more than an activist niche, putting theory into practice.

Despite the US gradually becoming more disengaged with green technology, others such as China and Canada recognise the potential in green technology for creating jobs and growth in their respective economies. The slack of others spurs them on, which creates a constant influx of prospects for the green tech sector. Put simply, their services are always required, able to thrive from country to country.

A Fundamental Foresight

Mainstream technology can seem repetitive and dull, tinkering with what has come before rather than turning tech on its head. Since 2011, technology has been accused of stagnation, something which the internet and petty app services seem to disguise in short reaching ideas of creativity.

However, green tech start-ups aren’t just winging it, and operate with a roadmap of climate change in the years ahead to strategize accordingly. In other words, they aren’t simply looking to make a quick profit by sticking to a trend, but have the long-term future in mind. Consequently, the green tech start-up will be there from the very start, building up from the foundational level to only grow as more and more people inevitably go green.

They can additionally forecast their finances too, with the ability to access online platforms despite the differing levels of experience, keeping them in the loop. Consequently, with an eye for the future, green tech startups are the ones who will eventually usher in the new era.

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Green Companies Find Innovative Ways to Generate Capital to Expand

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Green business is a booming opportunity for shrewd, environmentally conscious entrepreneurs. According to a white paper by the Association for Enterprise Opportunity, green businesses in the food service industry and other verticals are growing up to seven times faster than their conventional competitors.

“Green market segments in the United States are growing fast. Growth rates of “green” segments are outpacing conventional segments in every industry where we collected data – for example, over the decade ending in 2011, the U.S. organic food category grew at a rate of 238% compared to 33% growth for the overall food market, and most forecasts indicate that the shift to green will only accelerate across industries. Green business opportunities will be even more prolific over the next few years, because millennials are placing greater emphasis on environmentally friendly solutions.”

Unfortunately, many promising green companies are struggling to generate revenue. They need to be more creative to find funding opportunities in 2017.

Funding challenges green businesses face

After the financial crisis struck in 2008, banks and other traditional lending institutions became much more conservative about lending money. Many green businesses turned to grants provided by the Obama administration for funding. However, most of those grants have since been suspended under the Trump administration. Congress had difficulty resuming them, because most of the green businesses that were funded had a lower survival rate than the national average.

Without funding from either traditional banks or government grants, green businesses were forced to look for other financing options. Here are some options they have available.

Other lending institutions

While corporate banks are less likely to finance new businesses these days, many smaller financial institutions are more likely to assume the risk. Specialty lending institutions and credit unions with a strong social mission are often willing to invest in promising green businesses.

However, these lenders still require perspective borrowers to submit formal business plans and proposals on how they will use their funding. Too many of them have been burned by poorly managed green companies, so they must be cautious with lending to them.

Foreign lenders

Many other countries are more invested in green development than the United States. Companies with a presence in Norway or other European countries should consider seeking loans from lenders in those jurisdictions, such as Lånemegleren.

Green bonds

Green bonds are new financial instruments that have been developed specifically for financing green businesses. The Climate Bond Standard introduced a number of policies to ensure green bonds would be safe for investors and a reliable funding opportunity for green businesses around the world. By balancing the needs of both stakeholders, they have helped facilitate green financing.

The market for green bonds nearly quadrupled between 2013 and 2014. It rose to over $100 billion in 2015.

Green entrepreneur should find out if their business model is compliant with the climate Bond standard. They may be able to tap a growing source of funding.

Crowdfunding

Crowdfunding is another very popular way for all types of businesses to generate capital. Green businesses tend to benefit more than most other organizations, because crowdfunding investors tend to be more socially conscious. They are more eager to invest in companies that align with their outlooks on social causes. Since consumers are becoming more concerned about climate change and environmental preservation, they are more willing to invest in green businesses.

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