Between 2020 and 2018, the field of socially responsible investment grew to a valuation of 17.1 trillion USD. Companies that align with ethical investment now hold 33% of assets managed in the United States, too, and that number is poised to grow in the near future.
What is ethical investing?
Ethical investments support businesses responsible for positive social or environmental change. Instead of investing in corporations with horrible discrimination policies and histories, many consumers instead search for companies that promote employees regardless of gender, race, or disabled status. Understanding ethical stocks & shares investing is an increasingly important tool for modern traders interested in building socially responsible portfolios. Luckily, trusted authorities in the world of financial brokers and investments, AskTraders, have put together a guide to make finding smart investments a bit easier.
What can consumers who are interested in socially responsible and ethical investing look for when considering new investments? From workers’ rights to environmentally conscious companies and more, here are some business activities and issues to keep in mind.
Environmentally conscious companies and stocks
Discussion about the environment and the many ways humans can negatively affect it is increasing as temperatures rise worldwide. The search for environmentally friendly businesses and businesses dedicated to actively improving the environment is on the rise. Many potential investors are on the lookout for stocks that seem to represent decisive action on the issue of environmental health.
If this issue is important to you, you should look out for businesses taking action, not simply those paying lip service to the idea. A corporation that extolls the virtues of green energy while sending massive carbon emissions into the environment daily, in other words, is probably not the best investment you could make. Look at future goals and steps that have been taken in the past to advance the good of the environment.
Animal welfare
The idea of “cruelty-free” products has been an increasingly important one for decades. The concept has become an important one in the broader financial industry, even outside of industries that might be traditionally tied to things such as animal testing. More and more consumers want to know if the creation or use of a product involves harming an animal and if the people running companies support animal welfare.
From cruelty-free stocks to stocks that emphasise vegan products, there are many businesses espousing animal rights around the world. And while they might not be the most profitable, investors interested in ethical trades should keep this issue at the forefront of their minds.
Equality
Social justice continues to be an important aspect of today’s society. What do the companies you are considering investing in say about equal hiring and employment practices? Do their actions match those claims? Consider equal opportunity records and policies before investment. Be diligent with research, too, and keep in mind that equality refers to gender equality as well as racial equality and even disabled worker equality. There are many ways companies can show support for diverse populations (or ways in which they can ignore them).
Workers’ rights
Another crucial ethical investment consideration is how companies handle workers’ rights demands. Some businesses are actively on the lookout for issues impacting their employees’ health and productivity, especially as the world grapples with the COVID-19 pandemic. Others, however, are less concerned. From employing children to firing ill or disabled employees and much more, the issue of workers’ rights is an ever-evolving one.
Finding the perfect ethical investments
What issues are important to you? Finding the perfect ethical investments begins with investors who know what matters to them. List some of the issues most important to you, be it something listed above or an entirely new issue. Now look for businesses that align with those topics. Do your research before investing, and do not be swayed by polished websites with no substance. You are looking for action, not simply well-written declarations.
Are you ready to get started with ethical investing? Keep the information above in mind, and do not be afraid to reach out to professionals for help. Remember that investing is not a race, no matter how exciting the initial rush might be, and sometimes sleeping on a decision is the best way to move forward.
Finance and the banking sector, more often than not, get credit for, or have the infamy of being the destroyers of the planet, rather than a force for good. Corporate social responsibility initiatives make small gestures, very frequently for the sake of public relations or to appease a certain contingent of investors, but banks and the financial services industry are still very much in the business of making money for their executives and shareholders at all costs.
Because the global economy and political order is so dependent upon finance, however, rather than being an unavoidable destroyer of the planet - in fact, very much to the contrary - finance is actually, perhaps uniquely, positioned to save it.
Investing in Renewable Energy
Many of the more sustainable banks and green energy funds around the world already invest a significant amount in renewable energy. The world’s biggest and most influential banks, unfortunately, continue to put a tremendous amount of their capital into fossil fuels because it remains profitable. Barclays, BNP Paribas, Chase Bank and Goldman Sachs are all key players in international finance and they are all, for the time being, inextricably linked with the perpetuation of the global fossil fuel industry.
Helping Developing Countries Revamp Agriculture
The World Bank and other development banks around the world are already focused on and investing in ways to make agriculture more efficient and sustainable in developing countries. Climate change, population grown and accompanying land use changes are all putting strain on not only the ability of countries to feed their populations, but also on the surrounding ecosystems and biodiversity.
From international finance’s perspective, investments in sustainable agriculture aren’t just good for the environment, but they can also have a positive impact on the bottom line. Investment in better agricultural techniques is not only something that will help the global south, but stands to have significant positive economic and environmental impacts in northern countries as well.
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Capitalise Domestic Waste Management in Developing Countries
90% of waste is openly dumped or burned in low-income countries. This inevitably means that much of it either ends up polluting the earth, becoming a major health hazard for the surrounding, largely poor communities, and making its way into rivers and oceans, contributing to the degradation of marine ecosystems, threatening commercial fisheries, tourism industries and much more.
Finance could make it part of their corporate social responsibility mission to help provide governments and communities with the means to better handle solid waste and it could be done in a way that reflects both a social and environmental conscience, as well as an interest in a positive return on investment.
Help Develop a Market for Ecosystem Management and Restoration
It is difficult to quantify the economic value of a rainforest or a coral reef. Difficult, but not impossible. The worth of a healthy reef or forest can be measured in its contributions to local livelihoods and economies through tourism and fishing; the amount of carbon it captures; and the protection it offers against land and ocean-based natural disasters like soil erosion, coastal erosion and tsunamis, among other ways. Investments in projects which seek to repair and preserve don’t need to be thought of as purely philanthropic ventures, but sound business investments as well.
Conclusion
Reorienting and redeploying significant amounts of international capital, controlled and managed by the world’s largest banks and financial institutions, will require both a philosophical shift as well as the legitimisation of the idea that saving the planet is something that can and perhaps should be done with a profit motive in mind. The above examples are by no means exhaustive, but they represent some of the most meaningful things we, as a species, could do with the considerable amount of wealth our economic activities generate every year.
JPMorgan Chase & Co said on Thursday that it will commit $2.5 trillion towards sustainability and development initiatives over the next decade.
$1 trillion of the pledged funding has been earmarked solely for investment in green projects, including renewable energy and clean technologies.
The $2.5 trillion target for investment, which begins in 2021 and will run through to the end of 2030, will also be concerned with facilitating transactions to support socioeconomic progress in developing nations.
In 2020, the bank said it facilitated $220 billion worth of transactions that it designated as supporting sustainable development, which included $55 billion in green initiatives. The total exceeded its $200 billion target for the year.
Last week, JPMorgan CEO Jamie Dimon issued a letter to shareholders naming climate change as one of the world’s biggest issues alongside poverty, economic development and racial inequality, which he said the bank was engaged in trying to solve.
“Reducing greenhouse gas (GHG) emissions — the main cause of climate change — requires collective ambition and cooperation across the public and private sectors,” he wrote.
ESG investment rose to greater prominence in 2020, with many asset managers launching funds to capitalise on the wave of interest. JPMorgan launched its first green ETF in December 2020 and in February it revealed that global sales of “green bonds” might hit $150 billion this year.
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However, some climate organisations remain concerned that JPMorgan is not doing as much as it could to support climate action. In 2020, the company’s total fossil fuel financing came to $317 billion, greater than any other major US bank.
BlackRock, the world’s largest asset manager, has been accused of “greenwashing” its investment activities in a report showing that it continues to hold as much as $85 billion worth of investments in coal companies.
The report, which was published by NGOs Reclaim Finance and Urgewald on Wednesday, revealed that the company’s climate policy contains a loophole allowing it to hold shares in companies that earn less than a quarter of their revenues from coal. As a result, it has retained shares or bonds in many notable coalminers and polluters.
BlackRock still holds investments in BHP, Glencore, RWE, Adani and other companies involved in the fossil fuel industry.
The findings come a year after BlackRock chairman and CEO Larry Fink wrote a letter to clients claiming that sustainability had become the firm’s “new standard for investing.” As part of its new climate policies, it abandoned all of its actively managed investments in companies making more than 25% of their revenues from coal and introduced a range of new ESG fund options for clients to invest in.
However, the campaigners who carried out the latest research are now calling for BlackRock to divest fully from coal, including from companies like Japan’s Sumitomo and Korea’s Kepco that are planning to expand coal production. BlackRock holds $24 billion in assets in such companies.
Lara Cuvelier, a sustainable investment campaigner at Reclaim Finance, said BlackRock should fully distance itself from coal as a “bare minimum” change as global temperatures rise.
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“One year on, it’s hard to see Larry Fink’s sustainability commitment as anything other than greenwashing,” Cuvelier said in a statement. “If he really wants BlackRock to be a climate leader instead of a climate pariah, he needs to start aligning green words with green deeds, and direct BlackRock’s awesome financial power towards a sustainable future.”
UK-based consumer goods giant Unilever said on Monday that it would give shareholders an advisory vote on its plans to curb emissions at its next annual general meeting in May, becoming the first blue-chip company to give investors a voice on its climate plan.
Unilever has set a goal to reach net zero carbon emissions from its own operations by 2030, and to reduce the average carbon footprint of its products by 50% by the same deadline. The firm announced in June that all of its products would be carbon neutral from production to point of sale by 2039, and now plans to create a €1 billion climate and nature fund to invest further in improving the environmental impact of its operations.
Unilever will publish a detailed action plan outlining how it expects to hit these targets in Q1 2021, after which it will report progress against the plan annually and seek shareholder approval of its current measures. This plan will be updated every three years.
“It is the first time a major global company has voluntarily committed to put its climate transition plans before a shareholder vote,” Unilever said in a statement.
In order to achieve its climate goals, the company said it would need to transition its operations to 100% renewable energy, eliminate deforestation from its supply chain and rework many of its flagship products.
“Climate change is the most pressing issue of our time and we are determined to play a leadership role in accelerating the transition to a zero carbon economy,” Unilever CEO Alan Jope said.
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Unilever is one of the world’s largest consumer goods companies, with a market cap of $120 billion. Through household brands including Ben & Jerry’s, PG Tips and Domestos, the company claims to reach over 2 billion customers worldwide.
As a famous 2000s TV show said, ‘it’s not easy being green’, and in some ways they were absolutely right. But as a small business owner, there are lots of things you can do to ensure your small business is on the right side of the green argument.
Why Should You ‘Go Green’?
Climate change and global warming are two very complicated issues that have no clear answer. There are arguments for and against almost every type of renewable energy source. Of course, there are no political infringements on the entire green issue as well, but one thing we can all probably agree on is this: we should all be attempting to be better stewards of our planet.
Being better planetary stewards doesn’t have to mean everyone needs to go vegan, that you need to turn your heating off, ditch your car for a bicycle, and only washing in your local river. Instead, it means making changes to the way you work and the way you live that are better for the planet. If we all made little changes, we would soon make a big difference.
How Can Businesses Be Greener?
The complex issue of businesses going green can give anyone a headache. Which bits should you change? What can you legally do? They are all very difficult questions, and the answers do need to be weighed up using a proper costing analysis too to ensure that any changes won’t eat into potential profits.
There are marketing issues too. When the general public gets wind of a company trying to ‘do better’, there are usually two responses. One, your audience and customers are proud of your efforts, and you win ‘brownie points’ with them, or two, there will be another segment of your audience who are furious with you because you’re not doing ‘enough’. It’s worth considering the rough and the smooth and having clear answers for each side.
Don’t let the latter response put you off. Everyone has got to start somewhere, and so here are three ways your business can ‘go green’ that are easy to start right now.
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Be A Water Hero
Make it a priority in your business to conserve water wherever possible. Not only will this mean you’re helping the planet by looking after a finite resource, but if you can demonstrate that, unlike other businesses your size and in your location, you are making an effort to save water, customers will more likely head your way. You can even cut your water bills by conserving water. However, if you want to ensure that you make even more savings that can be put towards making your company even greener, then get in touch with a company that can cut back your business water rates by comparing the best deals. All the money you save from this can help you to continue on your green journey.
Encourage Greener Transport Options
There are lots of transport options you can encourage your staff to look at, and it’s always best to lead by example here. Whether you choose to take part in the bike to work scheme, invest in public transport loans, or you start a carpool, there are lots of options and many helpful government-backed schemes that you can take advantage of.
Plants In The Office
There is solid scientific evidence that having more greenery in the office can make staff feel happier and healthier. Make sure you go for real plants and flowers, and if you’re in the retail, food, or service industry, your customers will appreciate the little effort too!
There are no healthy people on a polluted planet. In particular, deforestation, the proximity between urban zones and wilderness, and the scarcity of certain animal species, are determining factors in the development of diseases that can be transmitted from animals to humans. As such, at a time of a pandemic requiring the confinement of half of humanity, it is appropriate to analyse this crisis through the lens of the 17 sustainable development goals of the United-Nations, which guide international efforts for a better and sustainable future for all.
Faced with the challenge of protecting the planet, and the effects of climate change in particular, it is essential to develop projects to restore and protect natural ecosystems. The goal is to rethink activities in the logic of a circular economy, to limit their negative impact on nature and to create sustainable wealth. The emergence of sustainable finance is vital for the transformation of the economy towards a low-carbon and inclusive model. Finance must become a tool for health, economic and social development. But how? Finance Monthly hears from Catherine Karyotis, Professor of Finance at France's NEOMA Business School and Anne-Claire Roux, Managing Director of Finance for Tomorrow.
Financial actors must re-invent their activity to support the projects and sectors of the ecological transition, serve the real economy, and preserve biodiversity for a sustainable planet. They must apply best practices to both anticipate transition risks and protect the value of assets, face new risks linked to the physical impacts of climate change, and adapt to regulatory changes. Ultimately, they must enable the transition of the economy to a low-carbon and inclusive model.
The ethics of an investor, a banker, a fund manager, or an insurer go beyond compliance: they have to know how to place their mission of in the present and future contexts, taking into account all economic, financial and ecological dimensions. They can take the opportunity to create wealth, or rather value. To this end, they must identify new sustainable opportunities and put a long-term perspective at the heart of their financing and investment strategies.
Financial actors must re-invent their activity to support the projects and sectors of the ecological transition, serve the real economy, and preserve biodiversity for a sustainable planet.
Already, the entire sector is developing its offers, practices and trade products. Actors are mobilising, initiatives are multiplying, and new professions specialised in sustainable finance are emerging within organizations. However, this paradigm shift will not be possible without expertise and new skills.
A financial analyst must master the accounting and extra-accounting instruments and documents to carry out a joint financial and extra-financial analysis, connecting one to the other and enabling financial policy decisions to be taken in the long term.
A risk manager must know how to assess financial risks in all their dimensions, ranging from credit risk to climate risk to health risk, to then cover them by using derivative markets for this objective, not aiming for speculative short-term gains.
As an asset manager must know how to "price" a bond. Why not do so for bonds labeled "green" or "sustainable"? Likewise, beyond socially responsible investing, how can ESG criteria be introduced into passive management, and how can we revise models by developing a green beta? If we talk about alternative investments, we can also integrate “green” or “adaptation” labels, as well as "green value" into wealth management and into particular real estate investments.
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France is at the forefront of green and sustainable finance. French financial players - whether private or public issuers, arrangers, or even extra-financial rating agencies - are the greatest specialists in "green bonds". They are pioneers in carbon accounting and the financing of natural capital. Collectively, the French financial sector constitutes a driving force for the development of sustainable finance internationally, through initiatives such as ‘Finance for Tomorrow’ and the ‘Climate Finance Day’, the ‘One Planet Summit’, or the ‘Network of Central Banks and Supervisors for Greening the Financial System’ (NGFS).
To strengthen this expertise and pass it on to the next generation of financial professionals, it is necessary to reinforce skills in sustainable finance. From an educational perspective, it is up to teachers and professionals in activity, to transmit to students the tools, which will allow them to reinvent the financial system for a secure, sustainable future.
In the aftermath of the COVID-19 pandemic more than ever, sustainable finance must become a tool for recovery and our students must become the future decision makers of a finance serving the real economy, society and the planet.
In a webcast to employees on Monday, BP chief executive Bernard Looney announced that 10,000 jobs will be cut due to the effect of COVID-19 on oil prices.
“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make,” he said.
Looney said that BP’s senior roles would “bear the biggest impacts”, with a new company structure seeing the number of senior-level jobs halved and group leaders cut by a third. “The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations,” he continued.
This new round of layoffs, most of which will be resolved by the end of the year, marks the end of BP’s three-month redundancy freeze that has commenced since March.
In addition to reducing BP’s capital expenditure by $3 billion and operating expenditure by $2.5 billion in 2020, Looney also suggested that the company will soon be refocusing its efforts to transition away from fossil fuels, and that the COVID-19 pandemic may accelerate the process.
“To me, the broader economic picture and our own financial position just reaffirm the need to reinvent BP,” he said. “While the external environment is driving us to move faster — and perhaps go deeper at this stage than we originally intended — the direction of travel remains the same.”
Since his appointment to CEO in February, Looney has already pledged to transform BP into a carbon-neutral company by 2050.
Today, the world of finance and investment is being held accountable to a new standard. And its colour is green.
Global institutions, such as the United Nations, World Bank, World Economic Forum and International Monetary Fund, and activist agencies are the driving force behind the adoption of ESG (Environmental, Social and Governance) Standards in socially responsible investing. Worldwide sustainable investments, covering environmental, social and governance, and impact investing, have grown sharply in the last few years to exceed US$ 30 trillion as at the start of 2018. But this is only the beginning.
ESG investing needs to grow, not only for the greater good but also because it is good for business. Here are some reasons why sustainable finance and investment are the right way forward.
Climate change is not only a reality, it is an emergency in some countries. While international accords, such as the Paris Agreement, and domestic regulators battle the crisis through legislation, it is also incumbent upon private enterprises to do their bit by adopting sustainable practices, making impactful investments and improving transparency and governance.
Neglecting the last can have extremely painful consequences, as we know from the 2008 Financial Crisis. What’s more, for corporations with global operations, any lapse in compliance with human rights regulations, labour norms or ethical practices can result in investor backlash, reputation loss, and punitive damages.
Today, the world of finance and investment is being held accountable to a new standard. And its colour is green.
Business economics is slowly shifting towards green resources as natural gas becomes cheaper than coal and other renewable forms of energy become more economical, predictable and scalable. Digital technologies are also supporting the shift to environment-friendly, cost-saving options such as online channels, digitised documentation, robo-wealth advisers, chatbots, smart assistants and cloud computing.
The generations of today and tomorrow are socially conscious and expect enterprises to espouse the same values. Many teenagers are already at the forefront of environmental activism. Millennial consumers, who will inherit wealth worth US$ 16 trillion over the next few decades, are exerting their influence to push financial service companies towards ESG compliant practices. Wealth managers, banks, and other financial institutions have no option but to meet the expectations of this important customer constituency.
Last but not least, financing ESG compliant projects helps to diversify the investment portfolio into new growth sectors such as clean and efficient energy.
Some financial institutions are taking a lead in adhering to ESG principles in lending and investing. ABN Amro has a comprehensive sustainability strategy focusing on climate change, circular economy and social impact issues. The Bank’s climate change vision aims at financing only “energy label A” real estate by 2030, increasing the share of renewable energy in the energy portfolio to at least 20% by next year, and also doubling sustainably invested assets to €16 billion by that time. It has also built the first bank office based on circular principles in Oosterhout, Netherlands.
The generations of today and tomorrow are socially conscious and expect enterprises to espouse the same values.
Another great example is Nordic Investment Bank, which takes sustainable financing very seriously. In addition to investing in the green bonds of companies in various countries, NIB issues its own environmental bonds and invests those proceeds into sustainable projects. The Bank follows corporate governance best practices to achieve several aims, including fighting corruption and money laundering, managing risk, and procuring ethically.
The 2030 Agenda for Sustainable Development adopted by UN member nations lists 17 sustainable development goals aimed at removing poverty, improving health and education, reducing inequality, and fostering growth while addressing climate change and preserving our oceans and forests. This agenda will succeed only if it has support on the ground, at the level of the enterprise. The financial services industry can make a significant contribution to this cause through sustainable lending and investing.
It’s been an interesting three years since the 2016 referendum, with the next ten years promising more of the same. Below, Erica evaluates Boris Johnson’s Withdrawal Bill and its implications for UK businesses as well as the society we live in.
1. Diversity of thought is key to long-term success moving ahead
Narrow bands of interest and self-interest don’t create a vibrant society, nor a thriving business. Diversity has to include different thinkers, different ethnicities, ages, gender, problem solvers. Those companies, authorities and organisations who can’t embrace and harness this will become moribund. And rightly so.
2. Digital and real-world complementarity is critical
At the moment we have no idea what any post-Brexit trade deals will look like. Developing aligned business models and associated revenue streams is vital. With entertainment, retail and business services moving increasingly online, reducing trading frictions by evolving new digital services and products from real-world trade is vital. And for those only online, there is a rich opportunity to consider how an IRL leisure or experiential offering can enhance your bottom line. After all, there is space in abundance available in every single UK high street.
3. Environmental responsibility – get with the programme
In the current Withdrawal Bill, climate and environmental alignment with the EU has been shifted to future trade agreements. That might be fine to discuss then, but your clients and customers will be expecting it from you now. This is not an option.
Responsibility has to be taken at every step in the commercial process and, increasingly, will be an influencing factor in every personal purchasing decision. Get your supply chain to sign up to sustainability/ethical mandates now to gain early mover advantages and positioning to enable trade within even the strictest global environmental trade frameworks. Sustainability should be as important to your business and as measurable as profitability.
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Sabzproperty has a highly skilled technical team of professionals at work with a strong desire to ensure client satisfaction through excellent service delivery. We have a vibrant and engaging property market which offers a large property inventory accrued by competent property agents and developers from different neighborhoods. This has attracted teaming property audience over the years and has birthed the responsive value rewarding network we have today.
4. Uncertainty is the new certainty
Nothing is certain over the next few weeks… who will be in power? The next few months… in or out?
So you need to understand what deep uncertainty means for your business, your customers and your own personal circumstances. Be prepared to pivot, to take advantage of short term opportunities, to revel in the unexpected. What could this uncertainty allow you to unlock in your relationship with your past/present clients? Where will it allow you to find future clients? What could you develop with or for your competitors? And where might you find new buyers in differing marketplaces you had not looked to before?
And if you are not in the D2C world – look out of the window to ask what you can sell to that person walking past? Thinking the unthinkable has to be part of your new strategy.
5. Tough trading breeds new opportunities
The British are inventive people. Everyone who lives in this wayward nation contributes to its determinedly individualistic approach. We lead the world in creativity – in fact it makes up £101.5bn GVA, the second-highest sector in the economy. In times of economic retrenchment and difficulties that may lie ahead, there will be the potential for green shoots to force their way through, for businesses to grow and develop in unlikely sectors and unexpected ways.
In the 2007/8 recession, people delayed big-ticket purchases and cut back on eating out. This saw a rise in small spends - cupcakes, lip-sticks, feel-good treats. Home baking and entertainment surged with businesses that could supply this ‘batten down the hatches’ mood benefitting. The emergence of shows like The Great British Bake-Off first screened in 2010 after 18 months in development and production captured this back-to-basics mood. Now a highly profitable global tv format sold across many countries, it illustrates how there are opportunities in even the most trying economic circumstances.
As the next few weeks and months unfold, focus on these five points in both your business and personal dealings. Keep your mind alive to opportunities, inventive thinking and potential pivots. Living with uncertainty is something we’re all getting used to within our own lives, the UK economy and planet as a whole. So embrace it and turn it into positive actions build a commercially inventive road ahead.
About Erica Wolfe-Murray:
Cited by Forbes.com as ‘a leading innovation and growth expert’ Erica Wolfe-Murray runs innovation studio, Lola Media Ltd. With creative head and FD experience, she focuses on auditing intellectual assets/IP to evolve new products & services from a company’s existing business.
She is also the author of ‘Simple Tips, Smart Ideas : Build a Bigger, Better Business’ aimed at the UK’s 10m+ micro business & freelance sector to help build greater commercial resilience in this dynamic but often ignored part of the economy.
New research has revealed that, of the average number of banknotes required by an individual adult each year, new £10 notes release 8.77kg of CO2 compared to their cotton-paper predecessors’ 2.92kg - exactly three times as much.
For £5 notes, that’s 4.97kg for polymer against 1.8kg for paper, or 2.76 times as much - just in the manufacturing of the required number of notes.
The research, that combines data from the Bank of England’s own reports with information on cash manufacture and usage, from sources such as the British Retail Consortium, to give a more realistic comparison.
The plastic notes were initially introduced in 2016, on the basis of their ability to include greater security features, being more resistant to dirt and having a longer life.
This extended lifespan was cited as the main reason for the new notes having a lower environmental impact. However, the bank’s data is based on what it calls functional units - the circulation of 1,000 banknotes over 10 years - rather than the number actually used by an individual, their manufacture and the number of exchanges they go through.
When it comes to disposal at the end of their lives, paper notes are returned to the Bank of England, where they are granulated and composted in a process similar to that used for food waste. Meanwhile, polymer notes are granulated, melted and mechanically recycled into other objects.
The greenhouse gas production of each method for both the paper and plastic £5 notes is essentially the same. The slightly larger and thicker £10 notes, though, mean that the polymer versions create slightly more CO2 in their end-of-life process than their paper counterparts.
Not every alternative method of payment avoids the problem, either. The increasingly popular Apple Pay, for example, comes with the considerable environmental cost of manufacturing an iPhone, which will typically only be kept for two years.
According to Apple’s own reports, a 64GB iPhone XS represents lifetime emissions of 70kg of CO2, with 53.9kg coming from the unit’s production. Almost eight times more than polymer £10 notes - the next most damaging option.
The most environmentally-friendly payment method is a bank card, despite being made from PVC. Over its three-year life, a standard card represents just 20.8g of CO2 production. Even when the technology for wireless payments is added, it increases to just 40g of CO2 - a fraction of that from banknotes.
(Source: Moneyboat)
Trump vs. China
Back in 1930, the US introduced the Smoot-Hawley Tariff Act, which raised their already high tariffs, triggering a currency war and, as economists argue, exacerbating the Great Depression. With President Donald Trump’s threat to put 10% tariffs on the remaining $300 billion of Chinese imports that aren’t subject to his existing levies, sending markets tumbling from Asia to Europe, the question on everyone’s lips is: Is history about to repeat itself?
In August, in a bid to hit back against Trump’s administration, Beijing allowed the Chinese yuan to plummet past the symbolically important $7 mark. Economists suggest that this currency manipulation is China’s attempt to display dominance and gain the upper hand in the trade war between the two countries as devaluating its currency could help counteract the effects of US’s long list of tariffs on Chinese goods.
As protectionist actions escalate and US-China relations continue deteriorating, investors and markets have been growing increasingly concerned even though Trump has delayed the imposition of his new tariffs until December. A full-blown trade war wouldn’t be good news to anyone and could seriously weaken the global economy, as the IMF has warned, making the world “poorer and more dangerous place”. Both sides are expected to experience losses in economic welfare, while countries on the sidelines could experience collateral damage. Furthermore, if tariffs remain in place, losses in economic output would be permanent, as distorted price signals would prevent the specialisation that maximises global productivity. The one thing that’s certain, no matter how things pan out, is that there will be no winners in this war.
Economists suggest that this currency manipulation is China’s attempt to display dominance and gain the upper hand in the trade war between the two countries as devaluating its currency could help counteract the effects of US’s long list of tariffs on Chinese goods.
Cyberattacks & data fraud
Millions, if not billions, of people’s data has been affected by numerous data breaches in the past couple of years, whilst cyberattacks on both public and private businesses and institutions are becoming a more and more frequent occurrence. With the deepening integration of digital technologies into every aspect of our lives and the dependency we have on them, cybercrime is one of the greatest threats to every company in the world.
Cyberattacks are rapidly increasing in size, sophistication and cost, as cybercrime and data breaches can trigger extensive losses. In 2016, Cybersecurity Ventures predicted that cybercrime will cost the world $6 trillion annually by 2021, up from $3 trillion in 2015. According to them, ”this represents the greatest transfer of economic wealth in history, risks the incentives for innovation and investment, and will be more profitable than the global trade of all major illegal drugs combined”.
Emerging Markets crisis
Since the early 1990s, emerging markets have been a key part of investors’ portfolios, as they have been offering strong returns and faster growth. However, global trade tensions, a stronger US dollar and rising interest rates have hit emerging markets hard. Still far from catching up with the developed world, many supposedly emerging markets are developing at a slower pace, which combined with the threat of a global trade war and higher borrowing costs on the rise, has made investors pull in their horns. Emerging markets are the ones feeling the strain and financial panic has been gripping some of the world’s developing economies.
With political instability, external imbalances and poor policymaking which has led to full-blown currency crises in the two nations, Turkey and Argentina have been at the centre of an emerging market sell-off last year. But they are not the only emerging economies faced with a currency crisis – according to the EIU, some economies which are already in the danger zone and could suffer from the same currency volatility include Brazil, Mexico and South Africa.
Still far from catching up with the developed world, many supposedly emerging markets are developing at a slower pace, which combined with the threat of a global trade war and higher borrowing costs on the rise, has made investors pull in their horns.
If the currency crises in Turkey and Argentina continue and develop into banking crises, analysts predict that investors could abandon emerging markets across the globe. “Market sentiment remains fragile, and pressure on emerging markets as a group could re-emerge if market risk appetite deteriorates further than we currently expect”, the EIU explains.
Climate crisis
In recent months, the media is constantly flooded with reports on the horrifying environmental risks that the climate crisis the Earth is in the midst of poses, but we’re also only starting to come to grips with the potential economic effects that may come with it.
Despite the significant degrees of uncertainty, results of numerous analyses and research vary widely. A US government report from November 2018 raised the prospect that a warmer planet could mean a big hit to GDP. The Stern Review, presented to the British Government in 2006, suggests that this could happen because of climate-related costs such as dealing with increased extreme weather events and stresses to low-lying areas due to sea level rises. These could include the following scenarios:
- Decrease in agricultural areas crop yields due to hotter weather and draught.
- Rebuilding roads that have been destroyed by flooding caused by rising seas and more frequent hurricanes.
- Having to build more efficient power grids because the existing ones are not able to withstand extreme weather conditions.
Due to climate change, low-lying, flood-prone areas are currently at a high risk of becoming uninhabitable, or at least uninsurable. Numerous industries across numerous locations could cease to exist and the map of global agriculture is expected to shift. In an attempt to adapt, people might begin moving to areas which will be affected by a warmer climate in a more favourable way.
A US government report from November 2018 raised the prospect that a warmer planet could mean a big hit to GDP.
All in all, the economic implications of the greatest environmental threat humanity has ever faced range from massive shifts in geography, demographics and technology – with each one affecting the other.
Brexit
Fears that the UK could be on the brink of its first recession in 10 years have been growing after figures showed a 0.2% contraction in the country’s economy between April and June 2019. A weakening global economy and high levels of uncertainty mean the UK’s economic activity was already lagging, but the potential of a no-deal Brexit and the general uncertainty surrounding the UK’s departure from the EU, running down on stock built up before the original 29th March departure date, falling foreign investment and car plant shutdowns have resulted in its GDP decreasing by 0.2% in Q2. This is the first fall in quarterly GDP the country has seen in six and a half years and as the new deadline (31st October) approaches, economists are concerned that it could lead to a second successive quarter of negative growth – which is the dictionary definition of recession.
And whilst the implications of Brexit are mainly expected to be felt in the country itself, the whole Brexit process displays the risks that can come from economic and political fragmentation, illustrating what awaits in an increasingly fractured global economy, e.g. less efficient economic interactions, complicated cross-border financial flows and less resilience and agility. As Mohamed El-Erian explains: “in this context, costly self-insurance will come to replace some of the current system’s pooled-insurance mechanisms. And it will be much harder to maintain global norms and standards, let alone pursue international policy harmonisation and coordination”. Additionally, he goes on to note that tax and regulatory arbitrage are likely to become more common, whilst economy policymaking could become a tool for addressing national security concerns.
“Lastly, there will also be a change in how countries seek to structure their economies”, El-Erian continues. “In the past, Britain and other countries prided themselves as “small open economies” that could leverage their domestic advantages through shrewd and efficient links with Europe and the rest of the world. But now, being a large and relatively closed economy might start to seem more attractive. And for countries that do not have that option – such as smaller economies in east Asia – tightly knit regional blocs might provide a serviceable alternative.”
