Guest article from Industry Expert, Michael Wilshire
In the last decade, the clean energy sector has grown at an impressive rate. Wind and solar accounted for less than 2% of global generation in 2010, growing to over 10% by 2020, with a 56% share projected for 2050 (see Bloomberg New Energy Finance’s latest “ New Energy Outlook”, Economic Transition Scenario). Global investment in renewable energy generation now runs at around $300 billion a year. Installation of domestic heat pumps added another $50 billion of annual investment in 2020.1 Total annual expenditure on electric vehicles and associated charging infrastructure, an industry that barely existed ten years ago, was an additional $140 billion in 2020.
The keys to this success have been a mix of technology innovation, coupled with policies that stimulated early demand for these developments. As a result, we are now seeing just the first instalments of a radically different and cleaner energy system. Innovation has been unusually rapid for three reasons
Modularity, a shift away from large scale generation and other assets towards new smaller scale units that are being deployed in large volumes – for example solar modules, individual wind turbines, heat pumps, batteries and hydrogen electrolysers. High unit volumes lead to strong learning effects that rapidly drive down costs. In solar, for example, every doubling of installed capacity has led to costs falling by over 28% – a learning rate that is almost unparalleled, other in a few fast-developing sectors such semiconductors, software and genomics.
Decentralisation, where the physical location of assets moves from the centre towards a distributed network of smaller, often interconnected assets, in homes, commercial buildings and local districts. New types of businesses are emerging that may install, operate, own or aggregate these assets – for example offering managed solar and storage services, EV charging, energy management, microgrids, and demand response services. In some ways, this catalyst for innovation is similar to the early days of the internet, a highly decentralised technology that liberated the telecommunications industry from closed, proprietary and centrally managed networks.
Digitalisation, in particular an abundance of data to and from sensors, controls and other devices (the so-called ‘Internet of Things’), low cost cloud computing, and machine learning. These technologies allow decentralised assets to be monitored, controlled and optimised in new ways that improve efficiency and resilience.
There are however still many challenges and the scale of required investment is huge. BNEF’s Economic Transition Scenario, which focuses on the direct economics of energy investment and removes longer term policy drivers, forecasts that between now and 2050, a cumulative total of $15.1 trillion will need to be invested in new power capacity, 80% of which is renewables and batteries, plus another $14 trillion in the grid. Even this is unlikely to be enough. For example, to stay on track for 1.75 degrees warming (as a reminder, the Paris agreement targets to remain below 2 degrees compared with pre-industrial times), we would need to more than double the cumulative amount invested just in power generation and grid storage assets to $35 trillion, even before allowing for additional power capacity needed to produce green hydrogen. Other challenges include:
Balancing the grid, asthe proportion of intermittent renewable generation increases and as more flexible gas fired generation comes under pressure due to its emissions. Curtailment, longer term storage, and demand management will all be needed.
Managing complexity.The transition to clean energy also requires a digital transformation of energy networks, so that they can handle fast growth in the number of underlying assets and devices that in turn generate huge volumes of data. Without new approaches, the complexity of doing this would increase in a non-linear, even exponential manner. New technologies are needed to meet this challenge, such as more modular software platforms and AI.
Ensuring resilience, for example strengthening the grid to help integrate renewables and EVs, with major upgrades in cybersecurity.
Deepening inroads into transport, which generates almost a quarter of total fuel-related emissions. Consumer-driven EVs are just the beginning and battery powered light commercial vehicles, buses and trucks are also strong candidates for electrification. Cities need to develop integrated approaches to different types of public and private transport. Other forms of transport such as long-distance shipping and long-haul aviation will need alternative low carbon molecules such as biofuels or ammonia, due to their requirements for high energy density and long ranges.
Decarbonising buildings,which account for around 10% of global emissions from fuel combustion, over half of which is from space and water heating. This requires a major shift away from gas and oil to electricity. Heat pumps that extract and concentrate heat from the outside air or ground and which can almost magically produce up to four times as much heat as their electricity input are very energy efficient, but for mass adoption the capital costs of installed systems need to fall significantly.
Cleaning up industrial manufacturing and processes, which represent just over a quarter of emissions from fuel combustion. Steel, chemicals and cement production are the most emissions and energy intensive sectors, but are often low margin, with long-established and optimised processes, high entry barriers and large amounts of existing capacity – all of which act as disincentives to major change.
Addressing these challenges will lead to a variety of new business and investment opportunities, for example in:
Asset investment,tobuild the energy infrastructure of the future. Utilities will need to invest heavily in renewable generation, grid infrastructure, grid-scale battery storage, and hydrogen electrolysers. One of the best applications for hydrogen is likely to be for long-term storage of energy to balance the grid in periods of peak demand. Other players, including oil and gas companies, are already shifting more of their investment towards clean technologies.
Deeper decentralisation of electrification. Continued investment in rooftop solar for commercial and residential premises is one example of decentralisation, but a massive programme of investment is also needed in distributed assets that can take advantage of cheap, clean electricity such as heat pumps for buildings, private and public EV charging networks and local battery storage. Installation and design services will be needed to support these rollouts.
Software platforms, that act as a unified interface with complex energy systems and simplify the challenge of developing applications and systems to run them. In the US, C3.ai, an enterprise software company, has developed a ‘model-driven architecture’ that acts as a layer of abstraction between different sources of device data, databases, machine learning frameworks, algorithms and applications – with energy as its largest current market. In Europe, software businesses like Greencom Networks, Kiwigrid and others have developed platforms, designed to help utilities control distributed assets such as control solar panels, batteries, electric vehicle chargers and smart home energy loads. Cybersecurity platforms are also being developed that similarly interface with a myriad of different devices on networks.
New service models.Whilst much of the energy industry has in the past been vertically integrated, we are seeing a distinction between businesses which provide a service and those which own or operate the underlying assets. For example, Octopus Energy in the UK, launched in 2015, now has 2.2 million domestic customers, 7.5% of the UK retail market. At the core is its ‘Kraken’ software platform, which supports a wide range of consumer services, including clean electricity retail, EV charging points, battery storage services, and integration with rooftop solar generation. It also licenses Kraken to third parties, with a total of 17 million energy accounts now on the platform.
Clean industrial processes. Technologies are being designed to reduce emissions from industrial processes. Examples include Boston Metal in the US which has developed a molten oxide electrolysis process that eliminates the need for coke in steel production. In Sweden SSAB (a Swedish steel company), LKAB (Europe’s largest iron ore producer) and Vattenfall (a major European energy company) are working together to decarbonise steel using hydrogen, aiming for commercial scale production within five years. CarbonCure has developed a process for adding captured CO2 to concrete as it is produced, thereby increasing its strength, embedding the CO2 permanently and reducing the amount of cement needed.
Continual technology innovation. Whilst ‘breakthroughs’ are often hoped for, technology innovation is often a more continuous process of learning in which a series of smaller improvements are made more gradually, but which collectively add up to a remarkable improvement over time. We are likely to see continued reductions in the costs of solar, wind energy, battery technologies, heat pumps and other areas – due to improvements drawn from engineering, physics, chemistry, materials and computer sciences. There is little evidence that the learning rates we have seen over the last ten years are slowing, and companies that best understand these trends and exploit them are most likely to prosper over the next decade.
Capital at risk. For illustrative purposes only and does not constitute investment advice.
Michael is a private investor and advisor, with a particular focus on the impact of emerging technologies.
Michael has significant industry experience having previously worked as Head of Strategy and Research at BNEF, where he built the research teams covering renewables, advanced transportation and digital technologies. He was one of the first investors in the company, prior to its acquisition by Bloomberg in 2010. Michael was formerly a partner at McKinsey, where he advised clients in the energy, technology and telecommunications industries on technology, strategic, operational and marketing matters. Prior to that Michael worked in the UK Department of Energy and was Private Secretary to both the Permanent Secretary and the Minister of State for Energy where he worked on the deregulation of the energy sector, nuclear policy and the privatisation of the electricity industry.
Michael has an MA in Mathematics from Cambridge University and an MBA from the London Business School.
If you’ve ever wondered whether the feedback you leave us disappears into the ether, we can assure you that it doesn’t, it flies straight to the desk of our Product team. Whether you’ve written to our Customer Service, left a review in the app store or participated in a round of research, we listen to it and make sure it’s incorporated into our roadmap.
Over the last months many of you have been asking to have more flexibility when it comes to choosing investment risk types. Our Product and Engineering team took this to heart and we are now excited to announce our newest addition to the Clim8 app: Multiple Accounts. In short, you can now open up to four different accounts with us, including one Stocks & Shares ISA and up to three General Investment Accounts (GIA).
What does this mean for you?
With multiple accounts, spreading your accounts across different investment risk types is quick and easy. Depending on your financial goals you might want to have several accounts with different investment risk types to help you align your Clim8 investments both to your medium term and longer-term objectives.
How do I get started?
First things first, make sure you have the newest version of the app installed. In your main Dashboard, you will see the account you already have in ‘Your accounts’ and below a list of ‘Available accounts’. Tap to learn more and open a new account in minutes.
Your main dashboard will show an overview across all your accounts, as well as individual account performance and valuation.
Can I select different risk types in my ISA?
At Clim8 we’re firm believers in getting features out to you as quickly as possible and then improving them based on your feedback. The truth is, with the limit on the number of ISAs you can open and the amount you can contribute in a single tax year, it’s a bit more complex to support multiple ISAs.
We know some of you want to spread your ISA allowance across multiple investment risk types so we’re looking to add this functionality very soon.
Get started today and make the most of your sustainable investments.
Guess who’s going to be on TV soon! Channel 4 Ventures, the UK’s largest ‘media for equity’ fund, has agreed to a £2,000,000 investment deal to support Clim8’s growth plans in the coming months. Channel 4 Ventures has previously supported such household names as Pinterest, Crowdcube and Meatless Farm, to name a few. We’re excited to be joining the ranks of these trailblazers who have disrupted entire industries with our mission to enable millions of people to invest their money for a positive impact on the planet.
“Purpose is at the heart of Channel 4’s vision and we’re delighted to invest in this ambitious purpose-led business. Climate change is one of the biggest challenges of our time, so we’re looking forward to supporting Clim8 to help them to achieve their potential of becoming a leading provider of sustainable investments in the UK.”
Vinay Solanki, Head of Channel 4 Ventures
What does this mean for us?
This investment will help us accelerate the growth of our impact and grow our Clim8 community by reaching more people with a TV campaign. In the words of our CEO, Duncan Grierson:
“Sustainable investment represents one of the most powerful ways in which we can all make a positive impact on climate change. And we can do so without compromising on returns. With Channel 4 coming onboard as an investor, we have the opportunity to reach a huge audience and achieve our goal.”
Keep a look out for us on your TV later this year 👀 .
Any other exciting news?
You bet! We have another great piece of news to share with you: We’re open to new investors as part of our 3rd crowdfunding. This is your chance to become a shareholder in Clim8 and join our green rocketship as we disrupt the world of sustainable investing. You can pre-register your interest to gain exclusive access to our launch before it goes public – don’t miss out!
Investing in start-ups and early stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Please click here to read the full risk warning.
The trick to building good products is to very clearly identify and define what problem your product solves. Useful products tend to solve a pressing need.
At Clim8, we’re starting with what we believe is now the biggest problem the human race has ever faced. The climate crisis is very real and very urgently needs to be solved.
Add on top the complexity, accessibility and murky nature of the investment world. And the difficulty of working out exactly what activities our investments are funding. We’ve got ourselves a pretty meaty (or should we say a plant based alternative) problem to solve.
Shifting towards sustainability
According to the United Nations Intergovernmental Panel on Climate Change, the world must invest $2.4 trillion in clean energy, every year until 2035, to avoid catastrophic damage from climate change. I think you understand why we’re building Clim8 invest now!
Research by Nordea Bank tells us that sustainable investment can be 27x more impactful on a person’s carbon footprint than eating less meat, using public transport, reducing water use and flying less.
Shaping Clim8’s product
The magnitude and complexity of this problem is huge. But so is the opportunity. And this is why we have always been determined to build Clim8 around a community of passionate customers and supporters.
We can’t solve this thing alone but together our impact can be huge.
That’s why we’re proud to have completed two crowdfunding campaigns and love the fact many of our customers are our shareholders.
This community has also been invaluable during the build of our beta app, helping us shape the early product we have today. Thousands of you have already downloaded our app and given us incredibly useful insight and feedback. But we know we are only one percent of the way there.
Our mission is to have a positive impact on climate change by empowering anyone to invest sustainably into truly green, sustainable companies.
We know we need to make it simple to invest in those companies that are actually leading the charge and having the most impact.
That is why we have decided to share our roadmap with our community and publicly. This is to help you understand what we’re working on right now and what problems we think need to be solved next. You’ll find a combination of features that are well defined and almost ready to use as well as some things we want to explore.
They often say it takes a village to raise a child. But in the case of climate change it takes the whole world. There is no time like the present to become a Clim8er.
With investing, your capital is at risk. This information is for illustrative purposes only and does not constitute investment advice.
Here, in our view, are seven sustainability trends to watch closely over the course of the year.
1. Capturing methane
Landfills emit 15% of the world’s methane emissions, a potent greenhouse gas 28 to 36 times more powerful than CO2 at trapping heat in the atmosphere.
Waste Management, one of the largest waste management companies worldwide, focusses on capturing this methane and using it to run its natural gas-powered fleet of vehicles.
Hopefully this system will also encourage other companies to capitalise on their own methane emissions.
2. Ending the single-use wave
Every additional six-month delay on the ban of single-use plastics results in hundreds of millions more items filling our landfills and oceans. China also recently decided that it would no longer (unsurprisingly) accept non-recyclable waste, heightening the landfill situation further.
Thankfully, we believe legislation is within reach and will force change.
For example, Canada is banning the majority of single-use plastics by the end of this year with Montreal aiming to have a zero waste policy by 2030.
Other countries including France, Taiwan and Kenya are in hot pursuit, many having already banned plastic cups, plates, cutlery and bags.
Combined with a widening variety of plastics and mixed-polymer plastics on the market, sorting waste is, in our view, a complex issue.
Good news though. Advancements in sorting technology continue to make headway in alleviating the pressure for waste-to-product companies such as Renewi.
However the system is still heavily reliant on humans separating out the different plastics at a maximum rate of 30 to 40 recyclables per minute. 2021 will be the year AI becomes prevalent. Increased sorting accuracy and efficiency enables AI-powered machines to sort 160 plastic items per minute.
4. Upping the recycling ante
Increased customer pressure and new legislation are pushing brands to think carefully about their design choices.
Whilst fiscal policy changes (for example a tax on all products that do not hit a 30% recycled-content threshold will be introduced in the UK in 2022) will drive some decision-making, others will be good-will, or value-led (the value of recycled materials especially rare earth could be significant which creates an incentive to recycle), such as the surge in battery technology recycling research by companies like Umicore.
5. Collaboration is king
Waste is, in our view, a systemic issue. Brands trying to solve the situation alone generally stall early on.
We believe worldwide collaborations and partnerships are and will be the answer. Co-founded by Tetrapak, Nestle, Danone and Veolia, 3R Initiative, in our opinion, is a prime example.
A global collaboration, it researches different methodologies to help reduce, recover and recycle the ever-increasing plastic production by companies. Findings are open source so all companies can benefit.
6. Thinking outside the box
Designing out waste completely is the ideal scenario. Unfortunately, society has become less and less circular over the decades. Only 8.6% of waste worldwide is recycled and the figure is getting worse.
Rethinking the way products are designed with end of life in mind will change this. DS Smith, a global packaging solutions company, now trains all of their designers in Circular Design Principles to help them hit their 2023 target of producing 100% recyclable or reusable packaging.
7. Is alternative better?
Sustainable paper-based packaging’s popularity has increased tenfold and Smurfit Kappa is leading the charge.
However, many other brands are turning to plastic alternatives such as plant-derived materials that claim to be biodegradable. Despite sounding green on the tin, in reality they typically only degrade in highly-controlled environments.
Although new varieties of such materials encourage consumers to lower their plastic consumption, they can wreak havoc on a waste management system not capable of processing these materials.
Though it’s not obvious, solutions, partnerships and innovations are being worked on behind the scenes. Working collaboratively is the only way to productively move forwards. Invest your money in companies pioneering the way and accelerate the rate of change.
With investing your capital is at risk. Information is for illustrative purposes only and does not constitute investment advice.
Water scarcity is one of four major challenges preventing 2.1 billion people, almost a third of our global population, from having regular access to clean drinking water.
The other three are pollution, quality and affordability. For this first part in the series, we will be focussing on water scarcity.
Water scarcity? And yet water is everywhere I look
The vast majority – 97% of water on earth is stored in its oceans. A further 2.5% is frozen in polar caps, is locked up in soil or polluted beyond repair. The remaining 0.5% of our global water resources is used by 99% of the Earth’s 1 trillion species, of which humans use a disproportionate amount.
Water scarcity happens in two ways. Physical water scarcity occurs when water supply does not physically meet demand. This affects 20% of the global population.
Economic water scarcity, however, arises when an adequate water supply cannot be tapped due to insufficient funds; often caused by lack of good governance. Economic water scarcity affects 23% of the global population, predominantly in Africa.
A range of innovation and technology businesses look to solve water scarcity via different channels.
Focus on reducing non-revenue water
We lose a third of all drinkable water worldwide. Old infrastructure such as leaky pipes cause inefficiencies, alongside human factors such as meter reading errors, theft and corruption.
‘Non-revenue water’ costs countries millions of pounds and usually passes onto the ratepayer, making affordability an ever-growing concern.
Thankfully, many companies have developed and are implementing solutions, for example:
Xylem SmartBallTM is a multi-sensor tool that detects and locates leaks without the need for costly excavation exercises. Africa’s largest water utility company, Rand Water, used this technology to examine 2,200 kilometres of pipelines and locate every single leak down to the closest metre.
Utility companies rarely have funds to replace infrastructure. In fact, USA companies need $1 trillion in the next 25 years to replace all existing leaky infrastructure. Aegion Corporation have invented future-thinking technologies that aim to enable effective pipeline rehabilitation rather than replacement.
Smart water meter technologies, such as Badger Meters, are being used to replace existing antiquated systems. Smart technology enables companies to check water usage, identify water leakages and detect tampering in real time.
Increasing solar power generation will bring this cost down, though some experts believe that desalination must be coupled with other solutions to reduce costs substantially.
To make desalination truly affordable, Energy Recovery, an innovative desalination company, produces highly efficient and scalable solutions that minimise existing plants’ energy usage and carbon emissions. To date, $2 billion in energy expenses have been saved and 11.5 million metric tons of carbon dioxide emissions have been eliminated.
A team in Singapore are also exploring biomimicry techniques to see how mangrove plants are able to extract fresh water from the sea with minimal energy.
Slowly changing perceptions
Reusing and recycling water should alleviate municipality and industry-wide water scarcity. Depending on whether it is drinkable, water can irrigate orchards, recharge groundwater or wash vehicles. Wastewater treatment technology has improved exponentially in the last decade. Kurita Water is a prime example that has created Zero-Liquid Discharge (ZLD) systems, a closed-loop process which treats and reuses water without any discharge.
The public appears to remain sceptical as to whether recycled, treated wastewater is drinkable. Highly visible champions such as Bill Gates are vouching for its safety, which should help grow the practice. Australia turning to greywater would save 1 trillion litres of water.
The global agricultural industry uses 70% of our freshwater supply. Inefficient watering methods loses much of it to field run-off.
Wind farms and solar panels are a common sight these days. Originally criticised for blemishing unspoilt landscapes, they are now welcomed as signs of greener times.
And as fossil-fuel energy gradually gives way to clean energy, wind and solar will likely take over as the dominant energy source. Especially in the UK and other less mountainous countries that do not benefit from an abundance of hydropower, currently the world’s most utilised renewable energy source.
Actually, over the course of the last two years, the UK managed several months without coal-based power generation at all.
The clean energy conundrum
Water might always flow, but what happens when the sun does not shine and the wind does not blow? How do you maintain a consistently sufficient supply of power when the weather isn’t playing ball?
Adding to the challenge, electricity consumption patterns are changing. Transport systems are gradually electrifying and our dependence on numerous electronic devices increases.
Clean energy: the missing solution
The answer, we believe, is energy storage. Combining solar, wind and battery storage technology (known as SWB) cannot only, in our view, help bring the cost of green energy contracts down but also balance intermittent energy supply for grid operators.
Think tank, RethinkX, believes that when SWB technology is finally fully integrated in power systems and running at optimal conditions, it will generate 3x-5x as much energy as today’s grid whilst energy can be stored on the less windy days.
If anything, clean energy sources are capable of excessive amounts of surplus electricity generation, produced at near-zero marginal cost, coined ‘Clean Energy Superpower’.
An idyllic thought but a few hoops we feel need to be jumped-through first.
Automotive industry – a source of inspiration
Battery storage size (the number of kWh that a battery can hold as opposed to the physical size) and output remains a challenge for the adoption of electric vehicles.
Thankfully the race to find solutions to these challenges is drawing closer; the magic figure of $100/kWh is widely seen as the threshold beyond which batteries will become mainstream. This is mostly driven by the Electric Vehicle (EV) industry’s need for batteries that last longer, hold more energy, and weigh less.
As of this month StoreDot, a startup battery manufacturer working in the automotive marketplace, released a battery that it says can fully charge in just five minutes; a notable step change brought about by highly-targeted industrial innovation.
We all want an electric car but where can we get power when we want it? The concept of ‘range anxiety’ is key; when people try to keep their battery charged 100pc even when they do not need it.
Some clean energy companies such as Vestas, a wind turbine manufacturer, are latching onto the innovative sprint and deep pockets of the automotive industries and forming partnerships with leading EV companies like Tesla to help accelerate the process further.
Capturing the clean energy superpower
Many energy suppliers are taking storage issues into their own hands.
Ørsted, originally a Scandinavian oil and gas company and now the world’s largest offshore wind power developer, has recently installed one of the first stand-alone, large-scale battery energy storage units near their wind turbine site off Liverpool, UK.
Ørsted can now, we understand, capture 90MW of energy directly from their turbines, helping existing local grid services to meet peak demands when required.
Flattening out peak demand
Factories have, in our opinion, had this nailed for decades; running their machinery overnight when energy is abundant and prices are low.
However, despite the availability of smart home technology on the market, adoption levels are still low; the cost savings are often not understood, or not enough to outweigh the timing convenience on a per-household basis.
Studies also reveal that perceived usefulness, ease of use, trust and compatibility are inherently affecting uptake levels. More research needs to be done, in our opinion, to enable companies to break down entry level barriers.
Elephant in the room or The inconvenient truth
Transitioning to a green economy, we believe, is going to need substantial resources; starting with all the raw materials needed to meet the growing battery and wind turbine demands. Wind turbines alone need 5.5Mt of copper to meet 2028 targets, regardless of all other metals required in their construction.
Sadly, the long-term ill-effects of most current mining operations are considerable. Mining these materials also has a detrimental effect on the environment. Most notably from air and water pollution, to land damage and loss of biodiversity.
Climate change deniers, in our experience, repeatedly raise this as part of their argument against the green transition. We must carefully explore this point while we look for alternative solutions.
Mark Carney, ex- Governor of the Bank of Canada and Bank of England, as well as Financial Advisor to Boris Johnson for COP26, has stated that the net-zero transition is the ‘greatest commercial opportunity of our time’. Many companies worldwide also share this opinion and are jumping on board to find solutions. The race is on to turn abundant amounts of clean energy into an abundance of money.
Companies are already jumping on the bandwagon. They are focusing on technologies that aim to minimise mining for virgin materials. Amazon’s Climate Pledge Fund recently put a sizable portion of its $2 billion pot into Redwood Materials, a company founded by Tesla’s former Chief Technology Officer. It focuses on solving the battery recycling challenge.
Whilst Vestas has teamed up with Aarhus University and the Danish Technology Institute to build a circular economic model. This retains and reuses everything, including the wind turbine blades, which to this day has been a sore sticking point for the industry.
The topic is hugely complex but in our view, if solved, comes with an equally huge reward. And we may not have solved the challenge yet.
But with so many countries and companies worldwide striving for a solution, one can’t help but feel optimistic that positive change is on the horizon.
The big question is – will it be too late? We think not, but it will require huge investment in the right companies to find answers fast.
With investing your capital is at risk. This information is for illustrative purposes only and does not constitute investment advice.
Climate catastrophe-lead headlines fill our newsfeeds on a daily basis. And the frequency appears to have been increasing exponentially since the start of the COVID crisis. From Australian bushfires that burn for months  to devastating hurricanes in the Caribbean , it has been near impossible to escape these devastating events and reports. For some, it can be rather overwhelming at times, especially when linked with a sense of helplessness. However, we believe there are many ways in which you as an individual can help fight climate change with your daily actions.
Discover your power – how can individuals make a difference?
How you choose to live your life can have an impact every single day. What changes can you make to maximise that impact and help fight climate change? Here are some of our views:
Transport – if possible, switch your main mode of transport to cycling (running is even better)  and reduce your total emissions by up to 11% .
Shopping – buy products and services from low carbon footprint companies. Apps such as CoGo and Pawprint can point you to eco-friendly options for different/various aspects of your life.
Food waste – minimise food waste and decrease your emissions by as much as 30% . Olio encourages users to impart unwanted food to others, whilst chef Jamie Oliver, publishes waste-curbing recipes.
Diet – move to a vegetarian diet and slash your emissions a further 25% .
Less is more – buy less. Full stop. And when you do buy something, select long-lasting, quality items.
Energy – switch to a renewable energy contract to take your emissions down a further 26% .
Packaging – choose unpackaged products and take your own bags when out shopping. Zero-waste shops encourage customers to use refillable food containers whilst local fruit and veg shops rarely use plastic-wrapped produce.
Travel – where possible when going on holiday, opt for ground transport over air. Traveling by train can emit as much as 66% fewer emissions . If unavoidable, offset your emissions using a company like ClimatePartner.
Your greatest impact
One vital component is missing from the list above – money. How and where you put your money is one of the most efficient and impactful ways to make a difference  .
Since the Paris Agreement was signed in 2015, global banks have invested USD 2.7 trillion in fossil fuel companies . Sadly, this figure continues to rise despite countries setting ambitious targets to prevent our planet warming more than 1.5 degrees.
Thankfully, you no longer need to invest in fossil fuels to make money. According to Nordea Bank’s recent research, choosing to place your money in a sustainable bank or investing in a sustainable fund is proven to have 27 times more impact on your carbon footprint than eating less meat, using public transport, reducing water use, and flying less .
As David Attenborough so eloquently put it, “it is crazy that our banks and our pensions are investing in fossil fuels, when these are the very things that are jeopardising the future we are saving for”.
Capital at risk. For illustration purposes only and does not constitute investment advice. Past performance is not a reliable indicator of future results.
From fashion to food, upcycling is in Vogue this year. No pun intended, here is the article. Everyone wants a slice of the cake. A welcome trend that is helping tackle our inherent waste problem.
Simply put, upcycling takes what would traditionally be seen as waste and turns it into new products of similar or higher quality. Making better use of the energy expended in sourcing, transporting and processing material, it prevents valuable resources going to landfill.
Waste is a recent phenomenon. Until the 19th century, people made all they needed at home, squeezing out every last drop of value from each item. Broken ceramics, shells and animal bones were all discarded.
During Queen Victoria’s reign (1837 – 1901), an enormous societal shift took place. Incomes were on the rise and people subsequently started buying what they previously made at home from stores. Packaged goods became the norm average household waste skyrocketed and the perceived value of each item was lost.
Only when waste started visibly piling up were people forced to start finding solutions to fix this new systemic issue. Upcycling was born.
Changing perceptions about food waste
The term ‘waste’ can imply something of little value. Although upcycling in other industries is becoming ‘trendy’, people still perceive food waste as ‘rotten’, ‘useless’ or even ‘inedible’.
Today’s biggest challenge is not figuring out how to upcycle food waste but convincing people that food waste is in fact perfectly fine to consume. Marketing has a major role to play if upcycled goods are to become mainstream. And not just for eco conscious customers.
Messaging, in our view, needs to steer away from waste’s negative connotations. Companies that have latched onto this have changed the narrative, successfully luring customers in with terms such as ‘by-product’ or ‘derivative’.
Killing two birds with one stone
Despite the marketing conundrum, upcycling food waste brings substantial economic benefits. Companies have discovered a win-win opportunity; an additional revenue stream and a means of saving money on waste disposal.
Their creativity, in our view, is inspiring. Here are some imaginative examples:
Sensient Technologies use leftover grape skins from the wine industry to make a hotly sought-after purple extract for dyeing.
International Flavors & Fragrances (IFF) recently safeguarded 400 metric tonnes of surplus spinach from farmers’ bins after their production levels exceeded supermarket demand. IFF subsequently turned the leaves into nutrient-rich powders, adding them to health products such as nutritional beverage powders or snack bars. Originally a pilot program, it generated an additional USD $1.3 million leading to discussions on how the initiative could be permanently rolled out.
Symrise uses discarded cranberry by-products that do not meet current food standards in cosmetics.
Givaudan converts spent coffee grounds into premium ‘coffee oil’ adding it to premium skincare products.
Rubies in the Rubble rescues leftover wonky and slightly bruised fruit and vegetables from local markets and transforms them into condiments.
We still throw a third of all food produced worldwide every year. We have a long way to go to tackle this but upcycling is definitely one lever we can and should be pulling to ease the load.
With investing your capital is at risk. This information is for illustration purposes only and does not constitute investment advice.
The process of directly trading individual stocks or bonds in the hope of making a profit by ‘beating the market’. This can be achieved when either an individual chooses where to put their money themselves e.g. day trading or when they invest money in a fund where the investment manager makes active investment decisions on their behalf.
Actively managed fund
A fund where a management team or investment manager actively decides how to invest an investor’s money in order to meet predefined investment goals.
The variety of life found in a single location, ranging from animals and plants to fungi and viruses. Biodiversity encompasses genetic variation within species depending on the ecosystem they are part of e.g. African vs Indian elephants
The reason a brand exists beyond making a profit e.g. Unilever’s Lifebuoy soap aims to reduce the spread of disease caused by lack of sanitation in developing countries by actively encouraging people to make handwashing part of their daily routine.
Carbon capture and storage (CCS)
Also known as carbon capture and sequestration. The process of permanently removing carbon dioxide from the atmosphere at source and then storing it, typically underground. The source of the carbon is usually a factory or power plant. (Our view is this is a controversial approach both in terms of cost and safety).
The total sum of greenhouse gases produced by a group, individual or company to support human activity both directly and indirectly. Often measured over a given timeframe.
Also known as climate positive. An activity or company that is removing more greenhouse gases from the atmosphere than it is emitting.
An activity or company that is removing the same amount of greenhouse gases from the atmosphere as it is emitting or one that does not emit any greenhouse gases at all (though in our experience, there are very few examples of the latter). This only applies to Scope 1 and 2 (definition below). They are generally said to be releasing net zero carbon emissions.
The process of a company placing funds into certified and tradable carbon removal schemes in order to counteract their carbon emissions output. Carbon offsetting is typically split into two categories:
Avoidance – projects that avoid emissions from being released from the outset e.g. forest conservation prevents deforestation and provision of clean stoves in developing worlds prevents wood being burnt for cooking.
Removal – projects that remove emissions from the atmosphere after they have been released e.g. planting trees.
Also known as climate negative. An activity or company that is removing less greenhouse gases from the atmosphere than it is emitting.
The cost applied to carbon emitted into the atmosphere. Pricing is typically determined in two ways:
A carbon tax – a set price allocated per tonne of CO2 emitted.
An incentive to emit less – usually the purchase of a limited number of permits (known as carbon emissions trading).
CDP (formerly known as the Carbon Disclosure Project)
The CDP is an independent not-for-profit charity that set up and now manages the global disclosure system which aims to help investors, cities, regions and companies handle their environmental impact. It houses large databases of company environmental information including in depth insights on carbon emissions and environmental strategies.
Center for International Climate and Environmental Research (CICERO)
CICERO is a climate research institute based in Oslo, Norway that works with governments and organisations worldwide, providing insight on how to solve climate change challenges. The institute is particularly well-known for the research it did on the effects of man-made emissions on the climate, the management of international agreements and civil society’s response to climate change.
An economic system that eliminates waste and aims to ensure materials and products are continually kept in use whilst retaining their total value. The system focuses on removing pollution and regenerating natural systems.
Climate change is the long-term alteration in the planet’s average weather patterns. Although climate change has occurred several times throughout Earth’s history, the term specifically refers to the change in weather systems and rise of average temperatures experienced since the mid-1800s (the beginning of the Industrial Revolution). High levels of carbon dioxide have subsequently been released into the atmosphere causing unprecedented changes in weather systems, never seen before in history.
Climate disclosures standards board (CDSB)
An international group of environmental Non-Governmental Organisations (NGOs) and businesses that have united to form a non-profit organisation. The CDSB is committed to changing today’s global corporate reporting model to one that equates natural capital (see Natural capital for definition) with financial capital.
Companies are provided with a framework that aims to enable them to report on environmental information with similar or substantially the same rigour as financial information. This degree of transparency is intended to provide financial institutions and investors with the level of detail required to analyse the risks and opportunities associated with climate change.
Conference of the Parties (COP) is the major decision making body of the UNFCCC (see below for definition). All 197 nations (known as parties), bar a few failed states1 signed the UNFCCC treaty in 1992. The parties meet annually to vote on the latest decisions for implementation.
COP is the only climate crisis forum in the world where the poorest countries’ opinions carry equal weight to the richest countries’ opinions. No agreements can be made unless there is a full consensus. The next COP meeting, COP26, will take place in Glasgow, UK in 2021.
1 states that cannot perform the two fundamental functions of the sovereign nation state in the modern world system
Corporate governance factor
Also known as governance or governance factors, it makes up the G in ESG (see below for definition). Corporate governance is a toolkit of rules, processes and practices that dictate how a company is governed and to what purpose. It spans a wide range of factors from outlining the distribution of responsibilities and rights amongst different stakeholders to rules on how decisions are made.
This structure aims to enable the governing body (typically the Board) to deal more effectively with the daily challenges of running a company. Company laws are designed to ensure companies are operated and managed in a way that is in their shareholders’ best interests and that conflicts of interest are appropriately mitigated.
Corporate social responsibility (CSR)
Also known as corporate responsibility or corporate citizenship. Corporate social responsibility is when a company consolidates social and environmental issues into its planning and operations. It is a self-regulating model that shows company employees, external stakeholders and the public that businesses can be a force for good.
The transition of an economy from one that relies heavily on burning fossil fuels to one that uses advanced methodologies to sustainably reduce and compensate greenhouse gas emissions.
Diversity and Inclusion
Also known as social justice. Diversity refers to the characteristics and traits that make individuals unique such as gender, race, age, orientation, disability, religion, beliefs etc. whilst inclusion refers to the social norms and behaviours that ensure people feel welcome in their surrounding environment.
When applied to the workplace, diversity implies that the group of people employed by an organisation directly reflects the diversity of society in which it operates. Whereas inclusion infers that every individual is treated fairly, able to contribute to the organisation’s success and has equal access to resources and opportunities.
Also known as divestiture. Divestment is the opposite of investment. The process of selling an asset such as equipment, real estate or a subsidiary for moral, political, social or environmental reasons e.g. Fossil fuel divestment means selling off investments in the fossil fuel industry.
Environmental factors refer to the E in ESG (look below for definition). This includes all the physical and non-physical influences that affect the organisms living in that area. When applied to a company framework, these factors pertain to all environmental elements in the political, regulatory, technological, economical and demographic landscape affecting how a company survives, grows and operates e.g. waste management, energy use, greenhouse gas emissions, treatment of animals, climate change, biodiversity, natural resource use.
ESG stands for Environmental, Social and Governance – three key factors required to measure and evaluate the ethical and sustainable impact of an organisation. Commonly used to gauge a company’s future financial performance and its behaviour against other companies.
Method of investing focused on delivering ESG criteria and impact when building portfolios or selecting which company to invest.
Investors that are actively avoiding putting money into companies that have a negative impact on society e.g. tobacco, arms and gambling.
A non renewable source of energy that releases carbon dioxide and other greenhouse gases when burnt. Sources include coal, petroleum, oil shales, bitumens, natural gas, tar sands and heavy oils and are generally found beneath several layers of sediment and rock. These contain carbon and derive from the remains of organic matter produced by photosynthesis; a process that began over 2.5 billions years ago.
Loan issued by a company or government to finance new and existing environmentally focused projects such as renewable energy. Investors put money into this loan in return for green bonds.
A type of marketing that uses inaccurate or misleading messaging to imply a product, service or organisation is more environmentally-friendly than it actually is. (Learn more in our Greenwashing guide)
Hydrogen Fuel (H2)
A zero-emission fuel, otherwise known as a clean fuel, that when burnt with oxygen in a fuel cell only produces water. Hydrogen can be sourced from a variety of domestic resources including nuclear power, biomass, natural gas and solar power, using extraction methods such as biological processes or electrolysis. Hydrogen is currently very expensive and is still not produced at industrial levels but many Governments have committed vast amounts of subsidies that should help costs reduce to a level that could make H2 competitive within 10 years.
Different types of hydrogen fuel exist:
Grey hydrogen – the most common and dirtiest hydrogen fuel. Grey hydrogen is made from fossil fuels using an energy-intensive process called steam methane reformation. 11 tonnes of carbon dioxide is emitted for every tonne of hydrogen produced.
Blue hydrogen – same process as grey hydrogen but carbon is captured and buried underground.
Green hydrogen – the cleanest and most expensive hydrogen fuel. Pure hydrogen is extracted from water using electrolysis (a powerful electric current runs through water separating hydrogen from oxygen), powered by renewable energy sources (definition below).
The basic rights and freedoms that every human on this planet from birth until death is entitled to without discrimination and regardless of nationality, ethnicity, religion, sex, race or any other status. Human rights include the right to work, education, life and liberty, and freedom of expression and opinion.
Investments are made based on the level of environmental and/or social impact achieved as well as financial return. Investors base decisions on impact evidence rather than where their values lie.
An evaluation of how an organisation’s activities affect the planet both positively and negatively through calculating how a company’s profitability would be affected if their social and environmental impacts were monetised.
An international treaty that entrusts state parties to reduce their nations’ carbon emissions. It was established in 1997 in Kyoto, Japan at COP3 (see definition above) though only enforced on 16 February 2005.
The severe exploitation of people for commercial, criminal or personal gain. These people are ‘controlled’ and forced to do an activity against their will. They are often unable to leave the situation because of threats, coercion, violence, deception or abuse of power. Modern slavery comes in a variety of forms including bonded or forced labour, forced marriage and human trafficking.
The world’s stocks of air, land, water, renewable and non-renewable resources (plants, animals, forests and minerals). These stocks are considered capital because they provide goods and services to humans and other species and are the basis for all economic activity.
The process of deliberately excluding companies in investment decisions that are involved in objectionable activities or sectors such as fossil fuel production and arms.
Net zero carbon
Net zero is reached when a company’s carbon emission rate equals its carbon absorption rate throughout its full value-chain i.e. Scope 1, 2 and 3 (see definitions below). In order to achieve this, companies find ways to improve operational efficiency and subsequently reduce carbon emissions in line with a predetermined science-based target (see definition below) of 1.5°C.
Any remaining emissions that cannot be removed will be reconciled by allocating funds to certified greenhouse gas removal schemes.
A source of energy that cannot be replenished in our lifetime and will eventually run out e.g. Oil, Coal.
Also known as Paris Climate Agreement or Paris Climate Accord. The Paris Agreement is short for the Paris Agreement Under the United Nations Framework Convention on Climate Change and is a legally binding international treaty on climate change adopted by 195 countries and the European Union.
It was established at COP21 (see definition above) in Paris, France in 2015 and requires that every state party does everything in its power to limit global warming to 1.5°C. The treaty sets out to improve on what was agreed in the Kyoto Protocol (see definition above).
A fund that replicates an index. The most famous type of passive investment is Exchange Traded Funds. In passive investment, the involvement from fund managers is minimal and, as a result, costs are usually much lower than those of actively managed funds.
An investor buys and holds a diversified mix of assets for long periods of time with minimal trading efforts. The most common form is index investing when investors buy assets that mirror the market index.
Physical risks of climate change
Risks associated with climatic events such as hurricanes and droughts that will affect a company’s physical assets i.e. supply chain, markets, customers and operations.
A set of investments in any kind of securities (listed or not), selected along specific strategies or criteria.
Actively looking for companies to invest in that have sustainability practices embedded in their core structure such as socially responsible business practices or environmentally friendly products.
Product carbon footprint
Also known as life cycle product carbon footprint. It is the climate impact of a product and is measured in carbon dioxide equivalents (CO2e). The footprint is calculated by measuring the total greenhouse gas emissions throughout the product life cycle, from extraction of raw-materials to end of life.
A purpose-driven company focuses not only on profit but takes a stance on issues beyond their products and services.
Something that can be restored, regrown or renewed.
Also known as alternative energy. Renewable energy is a source of energy that never runs out e.g. Solar, Wind, Tidal
When an investor considers ESG (see definition above) risks and opportunities in the decision-making process.
Science-based targets (SBT)
A set of goals, informed by independent climate science, that provide a company with a clear pathway to reducing their greenhouse gas emissions. Targets are required to be in line with the Paris Agreement (see definition above).
Scope emissions (1, 2 & 3)
Company greenhouse gas emissions are split into three scopes:
Scope 1 – also known as direct emissions. Emissions generated from company activity that can be directly controlled by the company e.g. heating, fleet vehicles, refrigeration
Scope 2 – also known as indirect emissions – owned. Emissions created during energy production prior to the company purchasing it and when energy is consumed by a company.
Scope 3 – also known as indirect emissions – not owned. Emissions generated from every other activity throughout a company’s value chain outside Scope 1 and 2. They include both upstream and downstream emissions.
A financial instrument issued by a company that is bought, owned and traded by other enterprises and individuals. Examples include stocks and bonds.
A single unit of equity ownership in a financial asset or company. It ranks lower than debt in case of company liquidation. The rise in value of a company is best encapsulated in shares rather than debt (see above).
Social factors refer to the S in ESG (look below for definition). The company’s attitude towards social issues including human rights, labour standards, adherence to workplace health and safety, diversity and consumer protection. They also include how the company interacts with suppliers, the local community, customers and other businesses.
Socially responsible investing (SRI)
Also known as social investment or sustainable investing. Actively seeking out companies to invest in that generate financial returns and make a positive contribution to society. This approach allows for companies that are not inherently sustainable but are investing in clean technologies e.g. a fossil fuel company investing in renewable energy.
A share of ownership in one or more companies.
Identifying and choosing stocks to invest in based on a particular set of criteria.
Assets that have been prematurely devalued and no longer able to earn an economic return. Many fossil fuel assets risk being ‘stranded’ soon.
Any form of financial process including capital flows and risk management activities that integrates ESG criteria (see definition above) into decision-making processes and strategies.
The process of maintaining change in a balanced environment so needs are met today whilst not compromising future generations.
A classification system developed by TEG (see definition below) that provides businesses and investors with a set of criteria detailing which economic activities are deemed sustainable.
Technical Expert Group on Sustainable Finance (TEG)
A group of 35 international finance experts founded in 2018 to assist the European Commission in developing the following areas:
Taxonomy regulation (see definition above)
EU Green Bond Standard
EU climate benchmark and disclosure methodologies
Guidance on corporate disclosure of climate-related information.
The financial risks associated with the transition to a low-carbon and more climate-resilient global economy deriving from substantial technology, legal policy and market changes.
United Nations Framework Convention on Climate Change (UNFCCC)
The UNFCCC was the first international environment treaty to tackle climate change. Founded in 1994 and ratified by 197 countries, the original objectives were to “stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system and prevent human damage and interference with the climate system.”
The UNFCCC is the parent treaty of the 1997 Kyoto Protocol and 2015 Paris Agreement (see definitions above).
United Nations Global Compact
The UN Global Compact is the world’s largest corporate sustainability initiative. Businesses are encouraged to sign up and commit to sustainable and socially responsible practices. The initiative is based on 10 guiding principles covering environment, labour, human rights and anti-corruption that organisations should embed in their value systems and their approach to doing business.
United Nations Principles for Responsible Investing (PRI)
A network of international investors founded by the UN, created a voluntary set of six principles. These principles encourage investors to commit to incorporating ESG factors into their investment processes.
United Nations Sustainable Development Goals (SDGs)
Also known as the Global Goals. A set of 17 goals that were adopted by every United Nations member state in 2015 to tackle the planet’s greatest challenges across society, environment and economy today. They are a universal call to action to protect the planet, end poverty and improve human lives worldwide by 2030.
Values based investing
Investing in companies that align with not only gain financial return but align with personal values.
All activities and actions, from collection of waste through to recycling, that are required to manage waste.
With investing, your capital is at risk. For illustrative purposes only and does not constitute investment advice
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