Climate change is no longer the concern of just the stereotypical tree-hugger. Top economists are worried too. The World Economic Forum met last week in the snowy surroundings of Davos in the Swiss Alps, and for the first time climate change was placed at the top of global risks. The WEF’s annual risk report which is based on a survey of hundreds of senior executives and experts found the disruptions caused by climate change are one of the biggest risks the world faces.Calls for divestment are not just morally justified, they make financial sense too. Earlier this year, it was found that investors who divested from fossil fuel companies would have earned an average return of 13% a year since 2010 compared to 11.8% a year return earned by conventional investments (MSCI, which runs global indices used by more 6,000 pension and hedge funds).
Post COP21 – transition to a low carbon economy starts now
The global climate agreement at COP 21 in Paris set robust targets for the world to reduce C02 and halt global warming at 1.5 degrees Celsius. And with last year the warmest on record, this agreement could not have come soon enough. As UNFCCC Executive Secretary Christiana Figueres told the World Economic Forum last week, the agreement was the easy part; now the hard work begins to focus on how to mobilise finances for a transition to a low-carbon economy and divestment from fossil fuels.
Economists say unleash low carbon investments
With warnings that climate change is actually a threat to our economic well-being, making an impact on climate change is not just the right thing to do, it’s a necessity. Leading banks, for instance, Citi bank, the USA’s third largest bank, are telling us we need to take action. Its report last year showed that keeping global warming to 1.5 degrees Celsius rather than 4.5 could save as much as $50 trillion.
The claim that tackling climate change would cost too much is changing into research that failing to do so would cost too much. This has resulted in the World Economic Fund last week calling for financial to systems to modify to “unleash climate-resilient, low-carbon investments.”
Incentives on the decline, ethical spending on the rise
Despite the global COP21 agreement, in the UK the Government so far are failing to back the renewables revolution, whilst subsidising fossil fuels. Measures including scrapping the climate change level for renewables, loss in EIS status for community energy projects and slashing feed in tariffs all have an impact.
However, we have many reasons to be positive about community energy. Ethical investment was on the rise in 2015 with an increase of 9% to 13 billion. Consumers are taking control of their investments and thinking about ways their money can do good, benefit the community and contribute to the low carbon economy, but also give them a fair return.
The COP 21 agreement shows a global willingness to make change, and we’re getting on with doing it right now. At Bristol Energy Cooperative, we’ve just installed solar panels on two community buildings locally, and are raising money to finance more installations, the purchase of a working solar array, and develop a new solar farm.
The rising network of community energy coops across the country is making it happen. We’ve partnered with Mongoose Energy on our third fund-raise. Mongoose works with community groups, commercial project developers and investors to identify, develop, finance, build and manage community-owned, clean energy installations in the UK. Despite changes to EIS tax relief on community projects, Mongoose projects raised £4.8 million in just one month.
Goodbye to buy-to-lets?
Other changes coming in to effect this year may alter investment decisions. For the last 20 years buy-to-lets have been used as the investment opportunity of choice for many. But with tax changes being introduced this year, these investors may be looking for other options. Could an ethical investment in a bond offer be an alternative?
Go local – make a difference on your doorstep
An ethical investment in a local community energy project can help individuals be part of the solution right at home. It helps to strengthen local resilience against the backdrop of rising energy costs. Did you know that the energy in the UK costs more compared to similar developed countries with most of the UK’s fuel coming from fossil fuels (69%)? To meet COP 21 targets, this needs to change, and an investment in local community energy projects is very much a start in the right direction.
With green investments taking the world stage, we hope you’ll consider making 2016, your year of green finance. Check out our bond offer on Ethex for more information.
The value of an investment may go up as well as down. Past performance is no guarantee of future performance. An investment in the bond offer carries risk and you may lose the whole value of your investment. Please consider this carefully in the context of the complete share and bond offer documents and related information, and if needed, seek independent advice.
Investment decisions must only be made on the basis of the share and bond offer documents. Your original investment capital may be at risk and any return on your investment depends on the success of Bristol Energy Cooperative’s business as a whole. You should read the offer documents in full, including the risk factors set out in the offer documents, and the terms and conditions regarding this offer at ethex.org.uk before investing. You should consider taking appropriate financial and other advice before making any investment decision.
