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20 July 2012

Are Investors Bothered About Sustainability?

I was sat in the foyer cafe of one of the most impressive corporate headquarters I have ever visited, formalising a business relationship with the company's Head of Sustainability. In the cavernous main foyer space groups of surprisingly young sharp suited men and women were being politely ushered between presentations on different aspects of the company's operations given by its top executives.

"It's investor day." explained my companion looking over at the suits, "This is one of the reasons we need to up our game - to keep these guys happy."

When I was writing The Green Executive two years ago, I considered including investor pressure in the business case for sustainability, but ultimately omitted it as none of the executives I interviewed for the book cited it as a driver. When I asked the question, I got equivocal answers. But times change, so is investor pressure now a compelling reason to take sustainability seriously?

Well, according to consultants PwC, increasingly so. In a report released earlier this year, they identified seven pieces of evidence pointing in this direction:

1. Sustainability shareholder resolutions gaining traction - more people are voting for them.

2. Steady growth in sustainable investment in the last 15 years.

3. Studies suggest positive relationships between sustainability and financial performance.

4. Financial institutions are forming sustainability research departments.

5. Entry of well-funded financial information providers into the sustainability information provision business.

6. New research shows that investors are keen to access sustainability data.

7. Growing interest among institutional investors.

So the conclusion seems to be investor interest is increasing rapidly and will soon start telling - suggesting that this is indeed one more reason to stay ahead of the curve on sustainability.

 

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12 September 2011

Greening the bean counters

I usually start off my seminars by asking delegates why their company should go green (try it - much more effective than you telling them why they should go green). The first answer is almost always "Save money" and, after compiling a list of other reasons, this is identified as the most important.

I always challenge that answer. The delegates have explained how customer pressure is a factor, yet they then discount this in favour of short term cost cutting - maybe it's the current economic climate to blame. I usually point out that, without customers, the bottom line is an irrelevance.

There is always more scope for increasing sales than cutting costs. This is an essential truth to get across to anyone doing investment appraisals of green projects - they need to factor the scope for raising the top line into their calculations, rather than just a simple return on investment (ROI) assessment.

Interestingly those who seek to raise the top line will cut costs into the bargain - Marks & Spencer's Plan A programme was never intended to save money - but it has. But if you take a penny pinching attitude and expect a direct ROI on projects, you will never back the ambitious ideas that will set you apart from the pack in the market - missing out on the big rewards of green business.

So, don't forget to get the bean counters greened up and aware of their importance in the Sustainability performance of the organisation.

 

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24 March 2010

What's a Green Investment Bank?

With today's UK Governmental budget expected to be all doom and gloom, one green diamond in the murk could be Mr Darling's well trailed Green Investment Bank. If you, like me, are wondering what such a bank might look like and operate, the Guardian has a useful compendium of opinions here. We shall have to wait and see what Mr Darling has in his red box...

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1 October 2009

Green jobs in a green economy?

There's an interesting article on Fast Company giving three estimations of the potential for new green jobs by 2020:

  • 2.7m in the EU according to Greenpeace and the European Renewable Energy Council (EREC)
  • 10m globally according to the Climate Group
  • 30m globally according to the Global Climate Network (actually 40m new jobs but 10m lost 'brown' jobs)

So plenty of jobs, even if the estimations vary widely. The latter two depend on China going green big time, which it claims it will do but there is a lack of clarity over how this will happen in practice.

There has always been a lot of confusion and blether about how to create green jobs. People build centres of excellence (can you create a centre of excellence?) and green business parks (most of which fail, but that's another story), but there is only one thing which will make a difference.

Demand.

Renewable energy capacity in the UK surged 19% in 2008 and global renewables investment exceeded that in fossil fuels for the first time ever. Create that sort of demand and the supply and the jobs will follow. The rest, at best, will just facilitate change, not drive it.

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8 June 2009

Green Energy Investment Overtakes Fossil Fuels

In 2008 wind, solar and other clean technologies attracted $140bn (£85bn) compared with $110bn for gas and coal for electrical power generation (source: Guardian). There was a slight drop in investment at the start of 2009, but this is apparently recovering.

Given this background, it makes the decision by many 'big oil' companies to pull out of renewables an odd one. I'm sticking with my prediction that they will become the vacuum tube manufacturers of the 21st Century - the fossilised energy industry.

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2 July 2008

A good time to go green

Things have settled down here a little at Terra Infirma Towers after the most busy (and it has to be said lucrative) month in our history. I've said before that with companies feeling the pinch from falling orders and soaring oil prices, this is not a bad time to be offering cost-cutting services. The great thing about cutting material resource use, as opposed to human resources (hate that term), is that it doesn't cut your capacity to deliver products and/or services so as the economy recovers you're not floundering behind.

Of course companies can go beyond simply reducing environmental costs and start exploiting environmental business opportunities. Now you might think that this is a risky time to do so, but both the Guardian and the Times are reporting a surge in green investment and I hear the same from contacts in the banking industry.

Just don't think you can stick a green label on a duff product and expect it to succeed. Plenty have tried and failed. And I keep meeting more of them.

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29 February 2008

Clean Energy Investment Booms

New Energy Finance is reporting that "Clean" energy investment almost hit $150bn last year - up 60% on the year before.

Their press release states:

Among the key factors pushing this numbers sharply upwards in 2007 were government policies around the world to promote renewable power and cleaner fuels, oil prices approaching $100-a barrel and rising corporate and investor awareness of the opportunities in clean energy.

One of the themes of 2007 was geographic diversification. Western Europe and North America continued to enjoy sharp increases... but the momentum spread out to include other developed economic regions such as Eastern Europe and Australia.

Even more significant was the pick-up in activity in emerging economies, with China moving strongly ahead with projects in wind, biomass and energy efficiency, Brazil seeing huge investment interest in its sugar based ethanol sector, and Africa starting to see renewable energy and efficiency as partial answers to its power shortages.

Interesting stuff. Obviously the Low Carbon Economy is still in its infancy, but if investment continues to rise at this scale, markets will stabilise and the uptake of renewables and energy efficient technologies will start to become the norm, rather than the exception.

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