Page 19 - DIY Investor Magazine - Issue 26
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      This, he believes, resulted in a failure to deliver a more inclusive economic recovery, one that recognised the long-term benefits of tackling pressing social and environmental issues.
“While the arrival of quantitative easing in 2008 led to
an economic recovery, it was a missed opportunity for governments to place incentives in the systems to encourage a flow of capital to areas of need rather than merely to
bolster corporate profits – often at the expense of social and environmental challenges,”
Parry believes today there are better financial economic models we can learn from. He points to the adoption of new thinking in the Dutch city of Amsterdam, drawing on so-called ‘doughnut’ economics. This is a framework created by the Oxford economist, Kate Raworth.
Amsterdam has officially embraced a sustainable development model as a way of emerging with purpose from the Covid-19 crisis to balance needs without harming the environment. A central part of Raworth’s economic model is the inclusion of the UN Sustainable Development Goals for 2030 (SDGs).
Elsewhere, Parry points to the European Union’s (EU) latest green initiatives, including its much touted Green Recovery Plan, as positive news for responsible investment within continental Europe.
Source: European Commission December 2019.
At a global level, the UN estimates that the successful delivery of its Sustainable Development Goals (SDGs) could ultimately add US$12 trillion to the global economy, alongside 380 million new jobs.
Yet Parry is concerned, that, at this level, there is still not enough progress being made to hit the UN’s targets on climate change and other sustainability goals.
“In reality the flow of capital and tangible action needed to deliver on the United Nations’ (UN) Sustainable Development Goals (SDGs) have fallen well below target. The latest report from the World Business Council for Sustainable Development reveals that while 84% of member companies referenced specific goals in their sustainability reports, only 15% had aligned their business strategy to specific target-level SDG criteria.
“The danger in this is that SDGs become used as a communicative tool rather than as a broader framework to support capital-allocation decisions. It also seems some companies rarely get beyond the headline goal in the relevant SDG – creating the potential for ‘SDG washing.’ Clearly, more urgent action is needed in this area over the next decade as we recover from the Covid-19 crisis with genuine partnership likely to be a key element of SDG’s success.” he says.
Beyond the work of the UN and wider public sector initiatives, Insight senior ESG analyst Joshua Kendall believes the private sector can also play a major role in driving sustainability initiatives.
“The transition to a new green economy will be expensive
for countries. I see Europe as a driver of change. But public money is not the only driver, companies are also investing in technology to reduce emissions. Sure, there are costs involved, but when you see where the money is coming from, I see clear support from major investors in the shift to a greener economy,” he says.
Although Covid-19 has proved an enormous global distraction, many minds are still clearly focused on sustainability and the overarching threat of climate change. While the important Cop26 intergovernmental climate talks have been postponed until 2021 investors are increasingly taking action into their own hands.
In August, the UK’s biggest pension fund – the government backed National Employment Savings Trust (NEST) announced it was divesting from fossil fuels.
     19 DIY Investor Magazine | Dec 2020

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