My eldest – an incredibly resilient young woman – was recently part of school charity walk for a mental health charity. Collectively, they covered the distance of the equator over a four-week period – that’s 40,075 kilometres (kms), or just under 25,000 miles.
She became a little obsessed with the task and completed almost three times the required per-pupil average of circa 55kms over the four weeks, with a ‘PB’ in week four of 60kms. Her determination, and that of many of her classmates, was really impressive to witness. She and I would be out on the roads – within our 5km restrictions of course – most mornings at around 7am to get 45 minutes or so of activity in before the start of school. This gave us some fantastic daddy-daughter time which led to some interesting conversations.
She may only be 14 but is already a passionate advocate for equality and the environment. One morning, she commented on the growing prevalence of a new Covid-19-specific type of littering: face masks on the side of the road and in hedgerows. It got her fired up – she’s drafted letters to some local representatives to encourage them to get behind a post-Covid ‘plogging’ (picking up litter while jogging (or walking)) campaign. She then took it one step further and engaged her school community to do some plogging over the recent Easter break. All very positive for mental health and the environment hopefully.
What really caught her imagination, though, was a conversation we had about climate change, and related public and private policies. It was started by an electric-powered postal delivery van driving past us and evolved from there to the limitations of politics in solving global issues. Politicians, I told her, are only ever going to be able to make incremental changes until they have to return to the electorate, seeking re-election – a long-term game played by short-term participants.
The Long Road from Kyoto
It’s even more challenging to achieve consensus on a global scale. I explained to her how the countries of the world came together to formulate and sign up to a global policy on climate change over 20 years ago in the Kyoto Protocol, later reaffirmed through the Paris Agreement in late 2015. However, this short-termism has largely meant that, as we approach COP26 (otherwise known as the United Nations Climate Change Conference, the 26th annual get-together of the signatories) in Glasgow, the hometown of Copylab, it would be hard for me to point to any landmark achievement from these accords. Instead, arguments over quotas and historic-versus-current pollution levels have dominated the discourse.
That said, I told her that I remain hopeful for the future. While many of the largest-polluting countries have taken fewer steps forward than the Kyoto or Paris accords would have envisaged, some countries – several European countries in particular – have grasped the nettle more firmly and put policies in place that have encouraged private sector development and the deployment of renewable technologies. This has allowed innovation to flourish and led to dramatic falls in the cost of the underlying technologies, as evidenced in the accompanying charts.
While many of the largest-polluting countries have taken fewer steps forward than the Kyoto or Paris accords would have envisaged, some countries – several European countries in particular – have grasped the nettle more firmly and put policies in place that have encouraged private sector development and the deployment of renewable technologies.
The Rise of Renewables
Consequently, other nations, including China, have since introduced similar policies to encourage innovation and the deployment of renewable energy sources. Indeed, as noted in a Forbes magazine article from two years ago, unsubsidised renewable energy generation is now cheaper than incumbent fossil-fuel power generation in most circumstances. As a result, in many cases it now makes more sense financially to develop renewable energy than a fossil-fuel plant.
Neither the conversations with my eldest nor this blog are intended to veer into discussions on peak-load generation or the challenges to grid capacity from renewable energy intermittency. Suffice to say, my point to my daughter was that if the last 12 months has demonstrated anything to us, it is that with the right incentives and the right environment, the ingenuity of humankind to innovate and solve their way out of problems, even ones of their own making, can be boundless. Therefore, I am optimistic.
ESG For the Long Term
Linked closely to this is environmental, social and governance (ESG) investing, another area that requires a long-term outlook compared to the more typical market analysis dominated by quarterly company performance data, analyst reviews and portfolio recommendations. I was encouraged by a recent BlackRock survey on investor plans for ESG integration into their portfolios.
The research found that respondents planned to double their ESG assets under management by 2025, noting that a “tectonic shift identified in 2020 of… political and regulatory pressures, technological advances and client preferences, have pushed sustainability into the mainstream of investing”. Although the survey found this growth in sustainable asset investing to be most pronounced in the UK and Europe, at Copylab we have seen a fundamental shift towards ESG-related commentary and content from our clients throughout the world, whether they be integrating ESG throughout the investment-decision-making process, or through more targeted strategies such as thematic or impact solutions.
This can only be a positive for the environment as patient capital is required for innovation. It can only be a positive for the planet as policies of fairness and equality are encouraged, and that we get serious as investors about creating a more rounded definition of profit. Indeed, to ensure a sustainable future, as I’m sure my daughter would agree, profit needs to evolve to become defined by more than just dollars, euros, pounds, yen or yuan.
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