Green financing: A new way to shape the future of business and investment

A call to action


If you read the letter from Larry Fink, the CEO of world’s largest private equity fund “BlackRock”, you see how equity and finance has the power to shape the world.


BlackRock's Larry Fink: climate policies are about profits, not being 'woke' | Climate crisis | The Guardian 

- Larry Fink, CEO of BlackRock, the worlds largest PE fund (Kollewe 2022)


We all need finance at some point. Unless their founder is a billionaire like Musk or Bezos, founders and CEOs of startups need some external funding to grow their company to the point they can be profitable and make their desired impact. As individuals, we might need finance to buy a house. We may even loan out our own money in order to get some return.

 

This is an example of how much power we as induvial, have the power to shape the future of business and innovation for the greener. I want this post to break down what sustainable finance is, its impacts so far and what we need to do to spread the phenomenon further.

 

What is sustainable finance?

 

Very simply, sustainable finance are the undertaking of financial activities such as investment and capital allocation that take into account environmental. social and governance as a means of promoting sustainable growth as well as the long term stability of the financial system.


Sustainable finance: investors have a taste for green stocks, but want firms to be transparent | EU Science Hub

- Green fainting gives us the opporunitny to reach our own finical goals while still ensuring we make a difference to the future of the planet (EU commission 2018)


We all about the standard green financing methods, such as investing in green focused companies like Tesla and avoiding companies with poor records.

 

What I’ll bet you don’t know is the existence of smaller, more subtle green financing (Impact Investor.com, 2022):

 

1.     Renewable and Sustainable Equity

-       Setting these up in your home allows you to make tax savings or even receive cash payments which can then be put towards your mortgage in order to pay if off in a shorter time period.

-       As a result you can get full ownership of your home as a potential long term investment much sooner.

 

2.     Green mortgages 

-       By installing green energy technology like solar panels, some banks and mortgage companies are offering 0% interest for buying a home and buying solar panels along with it.

-       It does lead to higher upfront cost for buying the house, but saving on interest on a 20 year mortgage really does have benefits long term .

 

3.     Green stocks

-       Creating our own financial portfolios has never been easier, with numerous digital brokers and platforms offering access to investing in hundreds of companies.

-       We can essentially shape the future by voting with our wallets by putting onto the companies that truly have the future of the planet thought out. 

 

The road ahead

The world of investing and finance has never been easier to get into. With apps like Robin Hood and trading 212, as well as brokers like Vanguard and Fidelity looking to maximise the number of clients, investors, large and small, have the tools needed to shape the future by investing in the companies who not only have the most promising profits, but also the most likely to make a sustainable impact. 


Trading 212 Bucks the Trend, Reports Rising Profits in 2018 | Finance Magnates

- Trading 212 is one of many platforms that give us the power to choose what companies we support for future success (Skinner 2018). 


References:


Skinner, C. (2018). Trading 212 Bucks the Trend, Reports Rising Profits in 2018. Available: https://www.financemagnates.com/forex/brokers/trading-212-bucks-the-trend-reports-rising-profits-in-2018/. Last accessed 17th Feb 2022


EU Science Hub. (2018). Sustainable Finance: Investors have a taste for green stocks, but want firms to be transparent . Available: https://joint-research-centre.ec.europa.eu/jrc-news_en. Last accessed Feb 18th 2022.


Kollewe, J. (2022). BlackRock's Larry Fink: Climate policies are about profits, not being woke are about profits, no. Available: https://www.theguardian.com/environment/2022/jan/18/blackrock-larry-fink-climate-policies-profits-woke. Last accessed Feb 18th 2022.


Canadian Government. (2022). Sustainable Finance . Available: https://www.canada.ca/en/department-finance/programs/financial-sector-policy/sustainable-finance.html. Last accessed Feb 18th 2022.


Impact Investor.com. (2022). Sustainable Finance: 7 different types of green financing. Available: https://theimpactinvestor.com/sustainable-finance/. Last accessed Feb 18th 2022.



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