In the present time, CO2 emissions are not only affecting the environment, they also affect the image of companies towards potential investors.
Sustainability is something that is definitely here to stay.
Along 2019, the strong public concern about climate change has led to a shift in the preferences of many institutional and retail investors towards climate-related assets.
In 2020, BlackRock, the largest global investment management corporation with nearly 7 trillion euros, reported that “sustainability is the new investment mainstay” so that it was not only going to look for new opportunities in this regard, but also would stop investing in carbon businesses.
The giants Amazon and Microsoft also announced an ambitious plan about this matter. Their goal is to become CO2 neutral in the first place and then to make their carbon emissions negative by financing sustainable projects that reduce these emissions.
What are the trends that will lead responsible investment in 2020?
Compliance with the regulatory framework
Financial sector regulators have been working on this issue for some time, however, 2020 is undoubtedly the year when climate change formally entered into investment regulation criteria.
The different levels of government and environmental administration, from the international scope of the United Nations and national and even European frameworks have obligations and guidelines for adaptation to climate change. A clear example is the plan to reduce CO2 emissions.
Without a doubt, investment funds significantly value carbon-neutral companies.
It is arising an increasing pressure on companies to better communicate the climate risks and opportunities they present. It is, therefore, essential that transparency is the guiding thread of their sustainability strategies when reporting.
Trust in companies must be extended to those aspects that are currently sensitive issues for society. The fight against corruption, bribery and human rights, among others.
It has been demonstrated that large-scale technological change will be needed in the coming decades to achieve the international objective of stabilising atmospheric levels of greenhouse gases (GHGs) at levels that would prevent dangerous effects.
Innovation is key to the development of new technologies, processes and mechanisms to help us mitigate the effects of climate change. This is one of the most attractive aspects when making an investment decision.
Integration of the Sustainable Development Goals
Sustainable and responsible investment has become a common practice. It is no longer enough for a project to be economically profitable, but it needs to have a positive impact on society and the environment.
The Sustainable Development Goals are a guide that allows companies to identify whether their social, economic and environmental impact brings value to society, and consequently strengthen their reputation and relationships.
The objective is to find those assets that are best prepared to face the challenges of the future and that therefore have competitive advantages and sustainable businesses processes.
All these trends confirm that companies, investors and governments must prepare for a significant relocation of capital in terms of global warming risks.