Going green with sustainable investments can help to increase returns

  • Going green with sustainable investments can help to increase returns
    Independent.t. E.
    Ireland is the second worst country in the EU to combat climate change, says the report, published earlier this summer on the network for action on climate protection in Europe. The report, which analyzes countries in achieving their goals in the field of climate and energy, ranked Ireland 28th out of 29 countries of the EU. Only Poland is worse record. Ireland’s own Watchdog, climate change, climate change Advisory Board, also warned that in Ireland, according to forecasts, will close the meeting in 2020 and 2030 in the area of climate change.
    https://www.independent.ie/business/personal-finance/going-green-with-sustainable-investments-could-help-grow-returns-37251760.html
    https://www.independent.ie/business/personal-finance/article37251759.ece/ec0ca/AUTOCROP/h342/2018-08-26_bus_43191827_I1.JPG

  • Email

Ireland is the second worst country in the EU to combat climate change, says the report, published earlier this summer on the network for action on climate protection in Europe. The report, which analyzes countries in achieving their goals in the field of climate and energy, ranked Ireland 28th out of 29 countries of the EU. Only Poland is worse record. Ireland’s own Watchdog, climate change, climate change Advisory Board, also warned that in Ireland, according to forecasts, will close the meeting in 2020 and 2030 in the area of climate change.

Such inaction may result in Ireland being fined by the EU. Irish investors may also suffer lower returns on their assets if they don’t consider sustainable investing – where environmental, social and corporate governance (esg) factors within investment approach. Sustainable investing has traditionally been seen as adopting “ethical” positions, one of which is intended mainly for charities and University endowments. However, this is archaic. Sustainable investing actually involves a consideration of real risks that can provide future returns, with environmental factors becoming more important as the world moves to a lower-carbon, more sustainable economy.

If you share this view or not, there is no doubt that times are changing for investors. The EU regulation entered into force in early 2019 will oblige all pension plans have a formal policy esg and report it in its annual reports to members. The desire of Europe to the extension of these requirements on the investment climate and to increase the pressure on all investors, management companies, and companies with the aim of sustainability occupies an important place in their agenda.

So, how will this affect investors? In the transition to a low-carbon economy, it is possible that the trillions of dollars of investments in fossil fuel-from mining and energy companies associated with conventional cars will lose significant value. This can lead to fossil fuel-intensive assets, as well as some reserves become stranded assets with the company, just as the value of these assets is deducted.

Doom and gloom aside, the impetus for action in the field of climate and long-term sustainability also brings opportunities. While some investors may be confused by what may be a new direction and struggle with how to make decisions that are sustainable and profitable, they should at least understand how the money they invest in ESG factors into account. Another important step can be considered an indicator of low-carbon, designed for a specific index (e.g. world markets), but with less carbon dioxide emissions.

The huge costs of a sustainable infrastructure will also be needed to help in the transition to a low carbon economy. Although some funding will come from the government, a huge gap needs to be filled by private investors. To invest in funds that directly hold assets and projects related to renewable energy infrastructure such as wind turbines and solar panels, and rational use of natural resources such as forestry and agriculture, can also provide high returns.

While it’s fair to say that sustainable investing is a long-term offer in a fast growing industry, and not necessarily at the forefront of investors ‘ minds, it can also be more reasonable, as the areas which showed good results in the past do not have to perform, and in the future. One thing is certain – all investors are required to update their long-term investment, in order to adapt to this changing world.

Rob Meaney is the head of responsible investment at Mercer in Ireland (Mercer.t. E.)

Any investment review in this column the Author directly and should not be construed as recommendations from the Sunday independent

Online Business Classes