Photo by Marc Schulte on Unsplash

Investing in times of Climate Change – the race to Net Zero

The race to Net Zero agenda is a concept established in the Paris Agreement in 2015. It is currently at the centre of business, leaders, investors, and policymakers as an imperative process to avoid undeniable carbon emissions damaging our Planet.

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Climate change represents the most long-term menace of our time, affecting how we live, do business, and invest. Environmental, Social, and Governance (ESG) standards evaluate a company’s behaviour, performance and socially mindful investors’ performance to filter potential investments.

The environmental standard considers how an organisation safeguards the environment, encompasses corporate policies addressing climate change and more. The social criteria assess how it copes with employers, employees, suppliers, and customer relationships in communities where it functions.

Governance deals with the company’s leadership, executive payments, audits, internal controls and shareholders’ rights.

Even though the Procurement core metric is saving, the Net Zero agenda is changing the industry principles because many Supply Chains (SCs) generate carbon emissions. Procurement professionals depend significantly on data to assess their production processes and suppliers to set equal standards to work, set targets and monitor progress accordingly.

The indispensable steps for a successful Net Zero implementation:

·       Technology architecture is in its position to collect valuable data.

·       A knowledgeable discussion over such data.

·       A sustainable financial investment.

·       Building an Environmental Social and Governance (ESG) agenda.

·      Establishing Exchange-traded funds (ETFs) industry agenda.

The scope of ESG and sustainable ETFs is escalating rapidly in parallel to population.

The application of such practices involves an increasing amount of fixed-income funds. Some investments will be disadvantaged in the conversion to Net Zero, whilst others will be in a weak position to physical risks from hazardous episodes triggered by climate change.

Several governments emitted new regulations in 2020, limiting or removing ESG investing in retirement plans unless such plans significantly affect the financial performance. EFT is nevertheless a tiny portion of the SRI equation.

There are organisations in charge of measuring a company’s management of financially relevant ESG risk and opportunities. They evaluate quality, equity, securities, fixed income, mutual funds, ETFs, and countries. According to specific standards, they identify top industry leaders, large, mid or small, depending on the vulnerability to ESG risk and how well they cope with such risks compared to colleagues.

These organisations try hard to bring the best transparency to financial markets and make it possible for the investment community to make more profitable decisions for a better world. ESG risks and opportunities can vary by industry and company. Social Index is designed to expose companies with high ratings in each sector and leverage those standards, whilst excluding companies whose products may have adverse social or environmental impacts.

The ETF’s main index disregards stocks from specific industries involving tobacco, alcohol, pornography, nuclear power, firearms, and gambling. On the contrary, the Technology industry is a definitive guarantee of sustainable funds (Alphabet Inc., Google, Microsoft Corp.) Energy, materials, and utility areas are three of the EFT’s most important.

Key takeaways:

  • Companies use ESG standards to monitor investments based on business policies and foster accountable performance.
  • Many shared funds, brokerage corporations and consultants currently recommend investment commodities committed to ESG principles.
  • ESG standards can also support investors in preventing investment deficits when their companies face risky or unethical procedures and are held responsible.
  • The escalating progress of ESG investment funds in the latest years led to demands that companies have been deceitful or misinforming in making public their ESG achievements.

Why not start the transformation of our companies through ESG and sustainable ETFs?

Dave Food

M: +44 7775 861863

Photo by Marc Schulte on Unsplash