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The latest IPCC report,The cost of doing nothing and going on as normal is only increasing and advancing future risks. We are on track for global warming to surpass the internationally agreed-upon limit of 2 degrees Celsius by 2030. 3 billion people will suffer from chronic water insecurity if this happens. Many of the staple crops that we eat will also be affected.—This is leading to rising hunger across the globe. We can also expect an escalation in natural disasters and the entire relocation of coastal cities due rising sea levels. More than 25,000 species. This isn’t speculation. It’s a fact.
What can we do realistically to reverse the climate crisis other than changing our daily lives and buying sustainable brands?
We can demand action by choosing how we invest our money. We have the power to decide whether or not our investments have an impact.
E stands for environmental, S stands for social impact and equality, while G stands for Governance. The E, the S and the G in ESG must be prioritized. Photo credit: Studio Kenzo
The intersection of ESG and Governance (ESG) investing offers us the opportunity to invest for our future.—while It generates both financial and social returns. It’s a chance to prioritize people and the planet, invest in and/or buy from companies with more diverse leaders and decision-makers, and create a global economy that lives within its environmental means, reduces inequalities, and steers money and power away from countries and companies that violate human rights. Simply put: It’s a way forward that will help us prevent a climate catastrophe.
We are both consumers and investors, which makes us one of the most important stakeholders for business. They rely upon our capital to finance operations. This gives them immense power to transform the world. ESG investing and impact investing are powerful tools to save the planet. By reallocating capital towards businesses that have high standards—And away from those who invest in fossil fuels that are accelerating climate change—It will be increasingly difficult for companies not to prioritize people and the environment in order to make a profit.
To make a profit, the global economy depends on a sustainable natural environment.—and this affects everyone. According to the World BankThe global economy could be hit by climate change and lose $2.7 trillion in ecosystem services and biodiversity by 2030. If we continue to follow this path, the massive disruptions in our future will force businesses and organizations to rethink their roles as global stewards of multiple stakeholders. Those who fail do not succeed will simply die. Let me tell you why.
Rising sea levels pose a threat to coastal infrastructure and real estate. Water scarcity will impact supply chains and business operations worldwide. Businesses will need to consider sustainability as a priority over financial performance when complying with new regulations regarding fossil fuels, climate risks, and impact disclosure. And companies’ reputations will suffer as investors and consumers increasingly favor more sustainable companies. According to 5WPR’s 2020 Consumer Culture Report, 83% of millennials say it’s important for companies they buy from to align with their values.
Financial performance will be affected by sustainability performance. There is no planet B. Photo credit: Studio Kenzo
Investors representing trillions are realizing this. They are passionate about making a difference with their dollars. Domini Impact Investments’ poll shows that more than 80% of respondents are passionate about exchanging dollars for a positive impact. Respondents: 50%To achieve their ESG goals, they would be willing to sacrifice performance in order to get it right. While this is admirable,—It is very clear about the value consumers place upon sustainable investing—it It may not be necessary.
This is an example: In 2020, more than 80% of ESG funds outperformed benchmarks. That’s because today’s most progressive and visionary business leaders are already ahead of the curve. They know that investments in clean energy and low-carbon, climate-resilient infrastructure for water and better-quality health services are an investment in the long-term, not a cost to short-term profits. For example, wind and solar energy generated 10% of the world’s electricity last year alone and has tremendous potential for scale; investments in malaria eradication efforts are poised to generate $4 trillion in economic gains by 2030; and 85% of the world’s population consists of emerging consumers who want a hand up to access basic goods and services.
ESG and Impact investing are the best tools we have to leverage the power of capital markets in ways that reflect our vision of the world. WaterEquity was founded by me and I witnessed firsthand how investments in women and water in emerging countries helped entire families and communities to create wealth and improve their health.
Capitalism is living beyond its environmental limits. Photo credit: Studio Kenzo
What can you do as an individual citizen to help the world? Here are three ideas.
1. Become an active and educated investor
Do your homework in terms of how a company is managed, what its climate goals are, and what strategies it’s using to achieve them. Ask the financial institutions that will manage your retirement the tough questions.—They can also tell you if they can make sure that 0% are tied to fossil fuel investments. Ceres, a non-profit whose goal it is to change corporate environmental practices has been created ToolsInvestors can use it to find out how companies address climate change or water risks, how they are progressing towards net-zero goals, how to track shareholder proposals on ESG issues and engage companies.
2. Choose Financial Partners That Care About Climate Action
Seek out the social entrepreneurs, financial institutions, and impact investment managers who are creating financial vehicles, funds, and solutions that address the climate crisis and the world’s other pressing challenges (the ImpactAssets 50 This is a great place to start. Acumen, for example, is a global nonprofit that invests in social enterprise that provides affordable renewable energy solutions for consumers in emerging countries. Ellevest and ImpactAssets are financial institutions that offer ESG funds. These funds are designed to generate positive social impacts as well as financial returns around the world.
3. Have the courage to be determined Do The Work
I was recently asked by someone if ESG is a lost cause. My response? “Not even close—we simply haven’t done it yet.”
Alix Lebecis the founder and CEO of Lebec Consulting, You can find more information at Women-owned and women led firm that assists corporations and foundations, financial institutions and high-net-worth people to achieve their greatest impact in philanthropy as well as impact investing and ESG investing.
