I was working from a lovely hotel lobby at the Amsterdam canals this week, when a group of businessmen sat next to me. They were so close and so loud that it was impossible not to overhear them: “Solar energy is cute, but let’s be honest, it is a joke. Oil is still what gets everybody excited and our business is just going to be here forever.” I had to turn on Iron Maiden’s Fear of the Dark – which also happened to be one of my favourite songs, to keep myself from expressing my feelings in public.
Rather than getting into a heated discussion in the lobby bar, we hope that sharing some ideas on the topic will be a part of changing our collective mindset. We believe that if we want to make an impactful change, we need to talk money. So, the ultimate question is: How can we accelerate the systemic change by influencing where our money goes?
Here are 3 things we have been discussing extensively over the past months:
#1 Well-designed systemic change: Oil companies have had a major role in the development of our economy for decennia. It would be hypocritical for any of us to pretend we didn’t take part in the industrial revolution or didn’t benefit from economic progress based on fossil fuels. However, the current situation is calling for a gradual yet revolutionary systemic change – starting with business model innovation of the largest world players towards more sustainable and investing into green energy on a large scale. Systemic change must happen gradually – but it is time for broad public to demand more speed! We all decide every single day – with our wallets, which cause we support. So let’s be conscious and put our own money, whether it is investments or buying milk, into the hands of the companies who are serious about climate, environment and people’s lifes.
#2 More aggressive sustainability investment strategies: Financial institutions – especially the pension funds with some of the largest assets at their disposal, need to take greater accountability for the systemic change and get more aggressive on their sustainability portfolios. Even most of them have sustainable investment strategies in place, they are often quite vanilla. Just excluding ‘black list’ companies or green marketing sustainability portfolios, is not enough. I would love to see large financial players to start investing more aggressively into companies with tangible impact on the environment, rather than just into safe established companies who are taking minor steps towards sustainability but promoting it well. A good example of this are global companies making their products from recycled materials. No matter how much I love sneakers from recycled plastic bottles – when the recycled line is just a fraction from the total revenues, and the rest of the business model is still based on fossil sources and linear economy principles, I don’t call a company green.
#3 As the Dutch say – ‘To measure is to know’: There have been many discussions about measuring impact of investment portfolios. Even though here are several measurement frameworks in place, the investment community often claims they are not deep enough and that we may lack a more unified system. We are hopeful about the efforts attempting to link the SDG’s to the investment portfolios. However, until a comprehensive, generally recognised framework is developed, let’s just look at the 5 largest investment positions of the asset manager and we will see quickly see where the money goes. Green marketing or real impact?
While systemic change is a long run, we remain hopeful. The big players have their obvious responsibilities, but we all can influence the scales every day by making decisions about where our money goes: from buying organic carrots or second hand clothes, to deciding who manages our investments and pensions.
#sustainablefinance #greeninvestments #wearemissionc