Written by Sharon McDougall, Scottish Debt Help advisor at Scotland Debt Solutions, part of corporate recovery specialists Begbies Traynor
The urgency for businesses to go green is more than a marketing pull as natural disasters have tripled in the last 30 years, global sea levels are rising and more than 20 million people a year face displacement as a result of climate change.
Sharon McDougall of Scotland Debt Solutions explains why the time for action is now, and how eco-investing fits into the bill.
As we witness the health of the planet rapidly deteriorate, it’s clear that individuals and businesses alike must shoulder some responsibility to help clean up the planet and restore it to its former glory. There is a multitude of ways through which corporate entities can pave the road to becoming responsible employers, from educating their workforce, implementing ESG (environmental, social, and governance) criteria and eco-investing.
Eco-investing, also known as green investing, or ethical investing is a socially conscious way of investing in a cause that’s aligned with your environmental beliefs. Socially responsible investing means contributing to an organisation that drives efforts to protect the environment, such as an alternative energy thinktank, carbon offset project or eco property development.
The time is ripe to count your contributions
The pressure is on for more businesses to report on their service to the environment, making it a key determiner for both customers and investors when considering whether to engage with a business. As such, the time is ripe to count your efforts and publicly disclose them, whether through a formal report that you are legally obliged to release, or on a voluntary basis through marketing campaigns.
A combination of consumer, investor, and stakeholder-induced pressure, along with the catastrophic effects of climate change and global warming calls for businesses to do more to curb the problem. Take an informed approach when making charitable donations and engineer a green investment strategy with sustainability at its heart.
Investing in environmentally conscious causes
Eco-investing, also known as ethical investing or green investing means investing in an environmentally responsible company. More of these businesses need investors to back them to fund their research, from developing decarbonisation strategies, sourcing renewable or recyclable alternatives, to building eco real estate. Here are some types of eco-investing that present a host of opportunities to businesses looking to secure their next green investment.
· A common form of eco-investing is pooling money into an eco-fund where it is distributed to numerous environmentally friendly businesses. These funds range from feeding into a broad spectrum of businesses to more niche classes, such as renewable energy firms.
· Eco bonds and stocks are common routes that can be taken to show financial support and reap returns. Businesses can buy into these companies or lend to them, in return for sharing the same interests and supporting a shared vision.
· Eco real estate is also an emerging initiative where real estate with ambitious sustainability standards at the core is developed.
How green are green funds?
When investing funds, identify ESG standards and ensure that this matches ESG criteria, just as you would when building out a supply chain or commencing the tendering process. This factor should play a direct hand in shaping investment decisions as it provides true insight into the value of a business.
Beware of greenwashing which is when businesses make company operations appear greener than they are. Each green claim should be heavily supported with evidence-backed facts and thoroughly scrutinised as greenwashing is rife in the industry. While most eco-investing is done with honest intentions, businesses must understand what they are seeding their money to have a real and targeted impact.
