Is it worth investing in environmental sustainability? If this question itself doesn’t force you to think about the relationship between investment and the environment, you must read this article.
Look beyond your four-walled houses and you will see the reality of the world. Heat waves, sudden rains, extreme flash floods, frequent cyclones, and hurricanes, drought in some parts, and floods in others are just some effects of how the environment has changed over the years.
The efforts put in to reduce the carbon footprint have not been majorly successful so far. While the countries are trying to promote and execute green energy policies, there is still a lack of infrastructure and a foundation to generate energy from renewable resources.
Some countries are struggling with funds, while others don’t have suitable geography to support green energy generation. India is however among few countries that are blessed with both diverse terrains and resources.
What Is Sustainable Investing?
Sustainable investments are different from traditional investments. Any investment made in any project, company, stock, or shares that are in line with ESG falls under this category.
ESG means Environmental, Social, and Corporate Governance. These are a set of guidelines established to distinguish sustainable investments from traditional investments.
In layman’s terms, sustainable investments refer to those that not only provide financial benefits but also contribute to environmental sustainability and benefit our society.
Remember that investors have the key to changing the course of companies in favor of the environment. You have the power to leverage your funds to force companies and governments to create awareness about sustainable projects.
This form of investing is also known as impact investing and ESG investing. Sustainable investing helps to look at the long-lasting benefits for all environmental, social, and corporate causes.
The benefits of investing sustainably are discussed further in this article.
What Is Environmental Sustainability?
You might have been underestimating the effect of your investment decisions till now. Read this quote, what sells is what you see! The rule of demand and supply.
Irrespective of the fact of what a product is made, where it comes from, even if it’s bad for your health you buy it because that’s what you see. In doing so you are encouraging the manufacturer company to make more of that product.
The same goes for non-renewable resources, even though their excessive use has caused problems like climate change, ozone depletion, and water and mineral scarcity, they rule the economy. The effects of encouraging investment in non-environment-friendly companies have brought the human race today, where we are planning for sustainable and alternative resources to save the planet.
And this is where environmental sustainability comes to help. It is an approach where initiatives are taken for the sustainable growth and development of not just the environment but of the economy too.
India Invest has outlined SDGs or Sustainable Development Goals to reduce carbon emissions and dependency on non-renewable resources. It is investing in green energy generation programmes like solar energy, wind energy, electrical energy, and nuclear energy.
The SDGs are in alignment with the ESG guidelines. This green energy reform has also attracted investors who support environmentally sustainable investments.
As quoted by the Minister of Commerce and Industry Mr. Piyush Goyal, “We can not only change our source of energy in India but can also do that for the rest of the world.”
The Indian government is adamant to promote sustainable investments and green energy projects. As of now, India is leading the world’s largest expansion plan in renewable energy that aims to achieve 500GW of non-fossil fuel-based energy by 2030.
India has started various projects in solar energy like solar farms, solar cities, solar parks, and solar fields. Solar products like floating solar panels, rooftop panels, the hybrid model of solar and wind energy, and wafer solar cells.
The motive of environmental sustainability is simple to not do any commercial activity that is not beneficial for the environment. It covers investments in eco-friendly projects, conservation of wildlife and ecosystems, protecting and promoting green corridors, and encouraging the use of alternative environment-friendly products and practices.
SustVest is also a company that supports green energy and works responsibly to achieve its environment-friendly development goals. The company helps to create renewable energy generation options for multiple projects in partnership with big companies.
SustVest also promotes sustainable investing. Anybody from anywhere can invest in green energy projects like floating solar panels that are spread across India. One thing more lucrative is the return rate as well, on the monthly payout that the company offers.
To discover the top solar energy investment companies and reasons to invest in the environmental sustainability sector, check out our blogs on “Why Invest In Solar Energy Now” and “What Are The Best Solar Companies To Invest In India 2023?“
Unveiling Environmental Sustainability Meaning: Exploring Key Aspects
As we delve into environmental sustainability, we must understand the significant role that sustainability investing plays in shaping a greener and more responsible future. Sustainability investing, also known as socially responsible investing (SRI), empowers individuals and organisations to align their financial choices with their environmental values.
1. Climate Change
Climate change is not new. You must have heard stories from your elders of not experiencing soaring high temperatures in summers just 60-70 years ago. But time has changed with the climate included.
The major cause of climate change is human activities which largely include
- Burning fossil fuels like coal, oil, and gas causes the greenhouse effect.
- Deforestation and forest fires add more heat to the environment.
- Unplanned infrastructural development of cities causes an imbalance between nature
- Minings that lead to the depletion of natural resources.
- Waste disposal in rivers kills aquatic ecosystems causing drying up and affecting the water cycle of that region.
Everything is correlated, that’s how the environment works. All forms of pollution combined are responsible for the deplorable condition of the climate and hence the environment.
The dominance of non eco-friendly commercial activities is responsible for the massive change in climate shift. According to UNO, the action plan to combat climate change contains 17 Sustainable development goals. The SDGs are focused on cutting carbon emissions, adapting to climate impacts, and investing in required adjustments to achieve the target.
2. Greenhouse Gas
Greenhouse gases are the emissions from the burning of fossil fuels. This cluster of gases includes carbon di-oxide, methane, nitrous oxide, halocarbons, hydrofluorocarbons, and ozone. These gases form a layer above the atmosphere which doesn’t let the sun’s radiations escape through. As a result, the earth’s atmospheric temperature increases, this is the greenhouse effect.
Its effects on the environment are severely adverse and have changed the earth’s average temperature to 33 degrees Celsius, from -18 degrees Celsius. This means the Earth would have been cooler by 33 degrees in the absence of greenhouse gases. That’s a huge difference!
Right now some parts of the world are experiencing temperatures as high as 48 degrees, while some are going below freezing point to negative 45 degrees.
Moreover, the Earth’s expected rise in temperature per year is 1.1 degrees Celsius. This is going to cause even more harm to the biological ecosystems.
The COP 26 summit has advised the world nations to prepare for the following in the coming decade.
- Intense droughts,
- Forest fires,
- Water scarcity,
- Excessive rainfall and floods,
- Melting polar ice caps,
- Devastating cyclones and storms,
- Depletion in biodiversity and
- Rising sea levels
3. Resource Depletion
Resource depletion is the reduction in resource stock or source due to their accelerated use. The world is facing a shortage of both renewable and non-renewable resources. The continuous rise of the population has forced the consumption of natural resources at a much higher rate than expected.
The activities responsible for the depletion of resources are
- Deforestation causes a decline in forests and causes not just an imbalance in the ecosystems but also problems like soil erosion.
- Mining and ranching are done irresponsibly. They result in the depletion of mineral resources.
- Industrial and Technological development has led to more generation of waste materials. The waste is disposed of on land and in water bodies, causing the depletion of land and water resources.
- Urbanisation has consumed the agricultural land and forest areas considerably, causing the depletion of land, biological ecosystems, and water resources.
- Bad farming practices deplete the quality of soil and make it barren over time.
Countless reasons are causing the depletion of all sorts of resources. If you take a closer look, all are man-made.
4. Waste and Pollution
Waste disposal has become a severe problem. The developed countries are dumping their waste in other small countries for exchange funds, food, medical aid, and technology. You can imagine the picture of a country filled with waste. The sad thing is that it is not just limited to land. From ocean depth to sky, everything is polluted.
Let’s just talk about India, every day 27,000 metric tonnes of waste is generated. Out of which, 108,000 Metric tonnes of solid waste remain exposed and are dumped in landfills. Untreated waste has become a severe problem affecting the environment, human health, and the future prospects of the country.
In short, the solid waste management system needs to be more effective as the situation is getting alarming every day. Environmental sustainability cannot be achieved without decreasing pollution.
5. Water and Energy efficiency
Water and energy efficiency concepts are directed towards reducing energy and water usage with the help of innovative technological solutions. One common example would be the use of LED bulbs in place of halogens, incandescent, and CFL bulbs in terms of energy efficiency.
Take India for example to understand why energy efficiency in water treatments is essential. The Indian municipal system is the second largest in the world. It consumes about 4% of the total electricity produced in the country. The energy consumption by public water works alone is 50 MUs approx.
The use of less energy-consuming technology is the way to sustainable development. Relying more on replenishable resources like water, wind, ocean currents and solar will help progress towards the SDGs.
The issue of deforestation and logging needs no introduction. The lush green vegetation helps in maintaining better climate conditions, a flourished biodiversity, replenished underground water, and improves ecological balance. But, rapid deforestation has led to depletion in dense green cover all over the world.
As a result of the wildlife, nature, and climate everything is adversely affected. In India, the tree coverage area in the year 2000 was 38,830,422 hectares. Unfortunately, by the year 2020, it has lost 1,933,271 hectares, which is 5% of the total tree cover area.
Without green cover, it is not possible to achieve environmental sustainability.
According to the United Nations Environment Program (UNEP), 75% of the Earth’s land surface is drastically changed by human activities. 66% of the ocean area is impacted by human activities (fisheries and pollution largely). 90% of the marine fish stocks are exploited and gone.
These facts are alarming and a call to change our course of action. COP 15 stated that the major reason behind the depletion of biodiversity was the way humans utilize food and its resources. This includes activities like agriculture, fisheries, hunting, poultry, etc.
It’s important to invest in sustainable methods to revert this clock of Earth’s life sources. This commitment to environmental sustainability and development is essential for safeguarding the well-being of both present and future generations.
8. Air Pollution
Greenhouse gases do not just cause a temperature rise but it also doesn’t let other pollutants escape the Earth’s atmosphere. In 2021, WHO stated that not a single landmass is left where the air is not polluted. 99% of the world’s population lives and breathes polluted air.
The pollutants are harmful particles coming out from industries, factories, appliances, burning of wood, and coal, wind-blown dust, dust from vehicles, construction sites, agricultural practices, soot, and smoke.
Regulatory practices must be implemented on the ground level to control air pollutant formation. Controlling open fire for burning waste, cremation, or for winter protection, using alternatives to coal and wood for cooking, using sustainable practices for agriculture, discarding old models of vehicles causing more smoke, switching on to electrical vehicles, etc can be a few ways to curb air pollution sustainably.
Our blog “What Is Sustainable, Responsible, And Impact Investing? (2023)” delves deeper into the realm of environmental sustainability and sustainable investing.
7 Benefits Of Sustainable and Environmental Investing
1. Decreases Energy-Related Costs
By investing in the project complying with the ESG guidelines you will encourage sustainable projects. Your fund will help to sustain those projects long term. In return, you will receive benefits both monetary and ecologically.
Investing sustainably in renewable resources will cause a decline in investments in non-renewable resources. As a result, more investors will get attracted to renewable energy assets and a chain reaction will begin. Slowly, renewable energy investments will surpass non-renewable energy investments.
This will decrease energy-related costs and will help limit the issues of resource depletion, curbing air pollution, the greenhouse effect, etc.
2. Attract New Customers and Increases Sales
Investments in environmental sustainability projects have started showing immense growth. It has attracted new customers and increased sales. More companies are resorting to using clean energy to suffice their need for power. Solar and wind energy power generation are the few most sought-after green energy generating products.
Also, sustainable investing is a great opportunity to bring in new products and get new customers. India has introduced several schemes to attract investors to achieve the SDGs.
3. Tax Incentives
The government is giving out benefits like tax exemptions for investing in green energy assets. This is to motivate even small investors to put their trust in sustainable investing and earn from it.
4. Boost Workforce Morale and Innovations
India Invest particularly has introduced many programs like Startup India, One District One Product, Vocal for Local, Skill India, Invest India Grid, etc to motivate the youth to become entrepreneurs and participate in contributing to the Indian economic growth.
To India’s advantage, the initiatives taken by Invest India follow the Sustainable Development Goals standards and also the ESG.
5. Societal Impact
You can’t deny the impact of your investment decisions on society anymore. Climate change and covid have shown the vulnerable side of our world. What we support today will decide the future of coming generations. Investing in environmental sustainability resources has a major impact on reaching the SDGs. as it promotes the use of green energy and is important to make the shift from non-renewable resources to renewable resources.
6. Gain Loyal Customers
The common goal of sustainable investing is to encourage environmentally friendly companies and projects to move more strongly with their initiatives. It involves the common good of nature, society, and the world economy.
Research has shown that 99% of millennials are more interested in investing in sustainable projects. This is also because they are motivated by climate change and impact investing. They are loyal to the cause, which is enough to attain them a regular customer.
Think like this, will a person using an electric vehicle go back to petrol or diesel vehicles? No! There you have one loyal customer who will always opt for renewable energy options.
7. Maximize Employee Retention
Optimizing employee retention is a strategy that must be followed by all organizations. It helps in the sustainable growth of the company. It also helps in building trust between employees and employers.
It takes a lot of resources in recruiting an employee. Having a long-term relationship among employees helps the companies to grow. Otherwise, they will not have the resources to perform efficiently and will get stuck in a cycle of hiring and firing, which is harmful to the company.
The company with the maximum employee retention is Infosys. This company focuses on three factors to attain sustainability. They are social contract, resource intensity, and green innovation.
FAQs: Is It Worth Investing In Environmental Sustainability?
How can I get started with sustainability investing?
To get into sustainability investing, you can begin by assessing your values and goals. Consider working with a financial advisor specialising in sustainable investments to help you identify suitable opportunities.
Does the Indian government have any initiatives or policies in place to promote environmental sustainability?
Yes, the Indian government has implemented various initiatives to promote environmental sustainability development. The establishment of solar parks and cities, promotion of floating PV projects, and introduction of the PV Manufacturing PLI scheme are among them. Prime Minister Kusum Yojana, Solar Rooftop Yojana, and the solarisation of stadiums are examples of initiatives demonstrating the government’s commitment to solar development.
So, what do you make of it? Is it worth investing in environmental sustainability? Indeed yes! Sustainable investing is also a great opportunity for investors to be a contributor to this energy shift by investing in and promoting renewable energy products and companies.
In this fast-paced world, it is imperative to take small steps out of the box to stand out in your investments. Take a deep breath, check out SustVest, and take your chance towards investing in environmental sustainability.
Founder of Sustvest
Hardik completed his B.Tech from BITS Pilani. Keeping the current global scenario, the growth of renewable energy in mind, and people looking for investment opportunities in mind he founded SustVest ( formerly, Solar Grid X ) in 2018. This venture led him to achieve the ‘Emerging Fintech Talent of the Year in MENA region ‘ in October 2019.