Private investments in sustainable technologies such as renewable energy, water, energy efficiency, and green construction hit $5.3 trillion in 2014 — more than halfway to the 2020 goal of $10 trillion — according to a recent announcement by Ethical Markets.
To help track investments as they accrue, Ethical Markets in 2007 established the Green Transition Scoreboard® (GTS). The GTS tracks Renewable Energy ($2.6 trillion), Water ($484 billion), Energy Efficiency ($1.1 trillion), Green Construction ($512 billion), Green R&D ($363 billion) and Cleantech ($258 billion).
Ethical Markets says water is becoming a major investment opportunity as global policy makers, businesses and civic society realize water is critical to environmental, social and human capital, and must be integrated into financial markets rather than overlooked as an externality. The Water sector added $484 billion to the GTS, 9 percent of the overall total and more than either Green R&D or Cleantech.
The GTS definition of 'green' omits nuclear, clean coal, carbon capture & sequestration, and biofuels from feedstock other than saltwater-grown algae. Fossilized sectors are becoming increasingly stranded assets as perverse subsidies are targeted, low-carbon regulations are implemented and oil, coal and gas reserves become more costly and harder to exploit. Nanotech, genetic engineering, artificial lifeforms and 3D printing are considered on a case-by-case basis. The GTS omits government and institutional investments.
Sustainable technologies and infrastructure investments are the next evolution in finance, building on earth systems science and information from satellites tracking conditions on Earth, Ethical Markets says. GTS data sources include NASA; well-respected cleantech; Bloomberg, Yahoo Finance and Reuters; UN and other international studies; individual company reports; indexes such as Calvert, Domini and Pax World; PowerShares Cleantech Portfolio, Dow Jones Sustainability Indexes, London's FTSE4GOOD, NASDAQ OMX Green Economy Index, ASPI Eurozone; newsletters and stock reports from around the world posted daily on the Ethical Markets site. Sources of financial data are screened by rigorous social, environment and ethical auditing standards.
Since 2009, Ethical Markets has recommended 10 percent of institutional portfolios be invested directly in driving the transition to a sustainable economy.
In related news, a recent report by the SEE Action Network and the Institute for Industrial Productivity (IIP) found energy-efficiency programs are helping industry achieve higher energy savings, cost savings and productivity improvements. And across the pond, Unilever, Philips, 3M and several other members of the European Alliance to Save Energy (EU-ASE) recently signed a letter sent to the European Commission calling for a new set of competitiveness objectives to exploit all possible cost-effective energy-efficiency opportunities by 2030.
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Founder & Principal Consultant, Hower Impact
Mike Hower is the founder of Hower Impact — a boutique consultancy delivering best-in-class strategic communication advisory and support for corporate sustainability, ESG and climate tech.
Published Apr 1, 2014 1am EDT / 10pm PDT / 6am BST / 7am CEST