The reasons why renewable energy investments are on the rise

The reasons why renewable energy investments are on the rise

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Divestment campaigns have already been successful in influencing business practices-find out more here.

Sustainable investment is increasingly becoming popular. Socially accountable investment is a broad-brush term that can be used to cover anything from divestment from businesses seen as doing damage, to restricting investment that do measurable good effect investing. Take, fossil fuel businesses, divestment campaigns have successfully compelled most of them to reassess their business techniques and spend money on renewable energy sources. Indeed, global investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien may likely assert that even philanthropy becomes more effective and meaningful if investors need not reverse harm in their investment management. On the other hand, impact investing is a vibrant branch of sustainable investing that goes beyond fending off harm to seeking measurable good outcomes. Investments in social enterprises that give attention to education, healthcare, or poverty alleviation have direct and lasting impact on societies in need. Such novel ideas are gaining traction specially among young wealthy investors. The rationale is directing capital towards projects and companies that tackle critical social and ecological problems whilst generating solid financial returns.

Responsible investing is no longer viewed as a extracurricular activity but instead an essential consideration for global investors such as Ras Al Khaimah based Farhad Azima. A prominent asset manager used ESG data to examine the sustainability of the worlds largest listed companies. It combined over 200 ESG measures along with other data sources such as for example news media archives from thousands of sources to rank companies. They found that non favourable press on recent incidents have heightened awareness and encouraged responsible investing. Indeed, very good example when a couple of years ago, a notable automotive brand name encountered repercussion because of its adjustment of emission information. The event received extensive news attention causing investors to reevaluate their portfolios and divest from the company. This forced the automaker to make significant changes to its practices, namely by adopting a transparent approach and earnestly implement sustainability measures. However, many criticised it as its actions were only driven by non-favourable press, they suggest that companies should be alternatively emphasising good news, that is to say, responsible investing must be seen as a lucrative endeavor not only a condition. Championing renewable energy, inclusive hiring and ethical supply management should shape investment decisions from a profit making perspective as well as an ethical one.

There are a number of reports that back the assertion that including ESG into investment decisions can enhance monetary performance. These studies also show a positive correlation between strong ESG commitments and financial performance. For example, in one of the authoritative reports about this topic, the author highlights that companies that implement sustainable methods are much more likely to invite long haul investments. Moreover, they cite numerous instances of remarkable development of ESG concentrated investment funds as well as the increasing number of institutional investors combining ESG factors within their investment portfolios.