Fio Sustainability
Phillip Mostert
Vice President, Fio Capital Group
The growing concern about climate change and its impact on society has triggered a new investment conversation. In the past, companies have done little or nothing to maintain the environment and promote social cohesion and diversity; however, with growing demand by regulatory bodies and other public observers, investors have started incorporating concerns about these issues.
Sustainable investment is an investment that solves the present problems or challenges without jeopardising future needs. It is all about discovering better ways of doing business that will benefit corporations and citizens both now and in the future.
For the past few years, sustainable investing has become a buzzword in the world of investing, and more people are beginning to discover the numerous business opportunities available in the sustainable investment sector. Sustainable investment efforts can range from sustainable energy solutions, agriculture and food security, to carbon off setting.
Whatever decision we make can impact the environment, either as a person or as a business. It may not show now, but we will live with the repercussions in a few years. Climate change has caused famine, heatwaves, and a rise in Sea levels. Although climate deniers tend to minimise this event, we cannot leave this important issue to debate because it is real. Sustainable investment tells corporations to put profit, social and environmental responsibilities at par.
Investment strategies almost never consider external costs to the environment when calculating potential returns. But incorporating environmental risk and sustainability into investor mindsets is possible– and urgent.
Every day we hear more about the threats to our planet: catastrophic climate change, vanishing species, growing mountains of waste, and worsening divides between rich and poor. There is growing awareness that our global economy is environmentally unsustainable. Our prosperity depends on a wide range of resources and services supplied by our planet: land to feed ourselves, water to drink, minerals for our industries, and the humble bee to pollinate our crops.
Most of these resources and environmental services are overexploited and underpriced. Often, they are not valued at all in today’s economies.
Meanwhile, the economy is not delivering quality of life for a huge section of the world’s population: more than a billion people are undernourished, lack clean water and live without electricity. The global population is expected to grow rapidly in the next 30 years, from 6.9 billion in 2010 to 8.8 billion in 2040, mostly in developing countries. This growth will place even greater pressure on natural resources.
Climate change compounds these problems, changing patterns of rainfall and agriculture, increasing the frequency and severity of extreme weather events, and threatening to displace millions of people. We need to halve global carbon dioxide emissions by 2050 if we are to avoid the worst impacts, but this will require a radical restructuring of our economy away from dependence on oil and gas.
Our framework captures a comprehensive range of environmental boundaries and social conditions that a sustainable economy must respect. It can be applied to any sector or business, and investors can use it as a pragmatic guide to analyse the long-term sustainability of their investments.
Using the principles of sustainability to guide investment makes hard-headed business sense. For example, we have a solid foundation in science, which tells us that continuing to burn the fossil fuels that exacerbate climate change will profoundly disrupt economic activity. The floods and extreme weather events which we have seen over recent years serve as a warning of things to come.
Some will argue that the goal of a sustainable economy in 2040 is unrealistic. Undoubtedly, this is a massive challenge. But what is striking is that, in principle, it is possible to achieve this. It is also clear that the way financial markets operate over the next 30 years will be one of the most important enablers of, or barriers to, achieving that goal.
Investors can play a big part in achieving what we see as the ultimate goal of a resilient, sustainable economy that maximises quality of life for all, so that people can develop their full potential and lead productive, creative lives without sacrificing the environment.
Fio Energy
Fio Energy is committed to limiting the impacts of global climate change and a sustainable energy future for many generations to come and this can only be achieved if the world accelerates the transition from fossil fuels to renewable and sustainable energy solutions.
Fio Agri
The future of agri technology in Africa is promising, as the continent has vast agricultural potential and a growing population that is expected to drive demand for food in the coming years. However, there are also several challenges that need to be addressed to ensure that the benefits of agri technology are realised in Africa.
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