I came across a statement which states that “when a company operates with a sole motto of achieving profits, there is a no difference between gambling and doing business”. The mantra of current situation is to reduce poverty, achieve development goals and derive business objectives.  That is businesses should be operating on the principles of eudaimonia i.e., human flourishing or prosperity and that is the only sustainable way in the long run. With the current speed of growth by year 2050, world population could reach to 9 billion and majority move to cities for living. The average income in during those scenarios is expected to be at US $ 6,300. We might witness degradation in the environment be it Global Warming or Carbon Emissions, Resource consumption or water quality or water table etc. It needs incorporation of responsible investment today to provide security to future generation. When CITI Bank highlighted that it is going to measure how much carbons comes from its loans and the company is seeing to finance $250 billion of sustainable activities by year 2025 it is a very promising initiative. It is not for the first time that companies are aimed to reduce carbon emissions by venturing into alternative energy initiatives or emissions or providing sanitation and water supplies or waste or circular economy changes. In this blog I would like to give an overview of areas of responsible investment during current pandemic and future areas.

Whether you call it Socially responsible investment or ethical investment or ethical funds, the concept of responsible investment is there for years. It aims at deliberate exclusion of special investments. Like excluding firms with poor operation, generating hazardous chemicals, It takes into consideration the concepts like labor and human rights, environmental sustainability, working conditions. The rationale for such decision is socially and environmentally responsible companies are more profitable in the long term. There are generally four categories of such investments like environmental, religious or ethical, social and corporate governance.

When we look at the different responsible investment opportunities for an organization it broadly falls into various categories like i. Investment in buildings for physical environment ii. Management of natural resources iii. Development of technology to increase productivity iv. Human health management v. management of productive uses.

During current epidemic one area that stood out as a pre-requisite for survival – it the availability of food for living. Initially responsible investments were aimed at reducing the hunger and malnutrition to children and ensuring worldwide food availability. How it is noticeably clear that agriculture development is an essential criterion, mere increasing the total arable land will not make world sustainable. It will create loss of biodiversity and high land cost. Major organizations are already doing a responsible investment in this space by investing in the expansion of infrastructure, intensifying the land already in cultivation and using precision technology to help doing farming, land and water degradation, nutrient management, integrated pest management using both digital and conventional technologies. Now even organizations are also concentrating on managing the climate change, sustainability, better policies, financing provisions

The second area on which major organizations concentrating is sustainable energy management. Given that population will reach to 9 billion by year 2050. It would need around many large millions of megawatt electricity sources. The responsible finance initiatives in this segment is aimed at energy subsidies and concentrating on the alternate energy driven vehicles, equipment, and other targets. There are various themes for energy like hydro, geothermal, biomass, wind and solar technologies. These areas is already elaborated by many and I am not elaborating further in this segment.

Sustainable water sources and availability is critical for human consumption, agriculture, even deriving energy and running industries. We already see how over half of world water is lost due to human activities. Water segment development is essential in many countries to provide access to safe drinking water supplies, providing sustained water source for farming. Key priority areas include increasing productivity of water, upgrading irrigation infrastructure, investing on water intense crops behaviour. Targeting on climate change initiatives is also a target area for providing sustained water table as climate change can result in drought other calamities. Providing safety drinking and water suppliers in current pandemic is also an important investment for organizations.

Other areas where many organizations started to concentrate being the social front. The recent awareness on inclusiveness within the organizations for providing equal opportunities, cohesive societies, and accountable institutions. The topic of accountability is also high on agenda for many organizations in terms of transparency, public interest, fair play. The major investment in these areas is to invest in human capital management, productivity, common resources development

To conclude the topic of responsible investment has been there for many years and world has been sponsoring such initiatives in one way or other. The recent awareness in climate initiatives like carbon reductions, Circular Management of resources and technologies innovations are aimed not to only to meet the challenging business dynamics but also aimed to creating an environment to which future generations can thrive as well. The incentive for getting into this type of investments is not only financial but also feel good or do well while doing good, it is easier to convince investors who are socially concerned. Before I warp I would like to list of few of the responsible investments opportunities to organizations, during the current pandemic

  • PRI (Principles of Responsible Investment) in its bulletin listed out 7 actions. Those actions range from Engagement with companies failing to protect workers, by passing scrutiny etc. For details refer to UNEP site.
  • Investments to Safe guarding water supplies infrastructures from contamination
  • Food networks for hunger management and packaged material management
  • Agriculture infrastructure and associated support activities
  • Management of Health services and vaccination programs for community.
  • Hazardous or medical waste management facilities and infrastructure / collection management

Thanks

Jayakumar

Leave a Reply

Close Menu
%d bloggers like this: