If short term thinking isn’t the answer (and it’s not), what exactly is the question? Well, a few candidates spring to mind: why build a house with an expected life of twenty years and then use so few materials that can be reused when it comes to putting up a replacement? That’s short term thinking. Why build a factory that creates jobs, but then closes down inside a decade and in the process pollutes the local river system? Short term thinking (again): and, perhaps more than anything else, how are we planning to address the profound economic and social challenges posed by climate change? Not, that’s for sure, with short term thinking…
Global economies are now more threatened than ever by climate change. In this year’s Global Risk Report The World Economic Forum ranked various biodiversity and ecosystem vulnerabilities as the top five threats to future economic sustainability: and that should come as no surprise to anybody because more than half global GDP, a staggering $44 Trillion, is to some extent (and often more than less) dependant on natural ecostructures, to such an extent that “Nature loss”, as the Report terms it, is now a key variable in worldwide commerce, supply chains and markets. So it’s not just a “green” issue: climate change couldn’t be more important for business.
Since the Industrial Revolution economic activity has extinguished 83% of wild mammals and half of the world’s plant species, fundamentally altering ecosystems on three quarters of ice free land and two thirds of marine environments: one million species are now at risk of extinction within the next twenty years (a rate many hundreds of times higher than at any point since homo sapiens first sparked up fire).
So what’s the question?
It’s this: how can we can create and sustain essential economic growth but at the same time reduce the adverse social and environmental impacts of the value creation process? Not, as should now be obvious, by short term thinking, but by adopting instead Mainstream Impact Investment strategies: creating wealth by investing in well regulated and profitable businesses, operating in mainstream markets and succeeding because they look to the long term impacts of their decisionmaking. And by being responsive to global conditions, and the challenges of climate change in particular, these are more robust and better businesses too: better equipped to be profitable over the long term because they are prepared to engage successfully with the complex issues posed by sustainability, not because sustainability is an end in itself.
That’s why the Global Risk Report ended by saying “Business leaders have a crucial role to play, by putting nature at the core of their processes and decision-making and systematically identifying, assessing, mitigating and disclosing nature-related risks to avoid severe consequences. Businesses can be part of the global movement to protect and restore nature”.
Despite the credibility of the source, Donald Trump and his cohort of climate change deniers will probably find all this difficult to accept, but he (and they) are creatures of the short term too. Even if he wins in November, he’ll still be gone in four years, and the strident voices of denial will inevitably fall silent in the face of increasingly undeniable facts.
Now, more than ever, we need to work together to build low carbon economies and formulate long term solutions capable of reducing carbon emissions: Mainstream Impact Investment not only helps us formulate the questions as we embark on that task, its also a crucial part of the answer…
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Red Ribbon Asset Management has been investing successfully in groundbreaking, environmentally friendly projects across the globe for the last thirteen years, adopting cutting edge Mainstream Investment strategies and gaining expertise on Indian and the UK projects in particular. With more than 100 skilled employees, corporate leaders and innovators, it brings together a wealth of experience in every sector it invests in.
Executive Overview
The World Economic Forum’s Global Risk Report makes striking reading, reviewing a wide range of economic variables it finishes by finding the top five risks faced across the planet are all environmentally based. That’s the first time this has happened and it should give us all serious pause for thought.
Commercial and Investment strategies should now have climate change and environmental impact front and centre of their thinking, not only because it’s good for the planet but because it’s good for business too. And I’m sure Impact Investment strategies play a major part of that shift of paradigm: not only, as the article says, because it helps us understand the questions, but it’s part of the answer too.
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