2016 WHERE ETHICAL INVESTING CAN PROSPER
2016 will be a good year for the responsible investors to prosper
P – Paris Agreement. Governments have promised to monitor safe temperature levels more closely and have committed to the availability of more capital to achieve this.
R – Renewables. With the cost of technology coming down renewables are becoming the most effective option for generating electricity. Nowhere is this more relevant than developing markets where grid infrastructure is limited. An example of this would be Rwanda in Africa that has just had a 8.5MW Solar Power Plant built in just a year! This is now providing 6% of the population with electricity. The intention is to serve half the population this way by 2017.
O – Oil Strategy. As a result of recently falling oil prices many oil producing nations have been triggered into building up their renewable and energy saving infrastructure. Recent reports have indicated that countries like Saudi Arabia and UAE are looking to replace domestic consumption of fossil fuels with renewable and energy saving technology. This is because the cost of production against low oil prices is making the fossil fuel industries uneconomic. Instead these countries would prefer to concentrate on exporting oil.
S – Sanitation Despite great improvement in recent years there are still well over 2bn people in the world without clean drinking and sanitation water. Governments recognise that utility companies must have the ability to meet this shortfall whilst recognising that water is a precious resource. These companies provide good investment opportunities.
P – Property In a low growth, low interest economy income generating-assets such as real estate are attractive. It’s becoming increasingly evident however that sustainable returns are being secured on those properties that invest in energy efficiency, thereby cutting emissions and bottom line cost. This is reflected in the interest being shown by investment managers and asset owners in this area. In 2015 commercial property adviser, CBRE carried out an ‘investor intentions’ survey with asset managers. They found that 70% of 280 respondents considered sustainability to be a major factor in their asset selection process.
E – Electric Vehicles. Experts are predicting now that it won’t be too long before we start seeing a big increase in electric cars . The VW scandal has dented confidence in conventional fuel driven cars whilst the technology and cost barriers surrounding the electric cars are coming down. For example Tesla the US manaufacturer has been successful in developing a much cheaper and more robust battery, while also developing new storage and regeneration technology using solar power.
R – Reputation. More than evercompanies that don’t respect their environmental responsibilities run the risk of serious financial loss. The effects on share price to VW following the emission scandal is an obvious example of this.