WTF is sustainable finance?
The changing face of sustainability
Being sustainable today is more important than any other time in human history. Human evolution has led to a lot of changes in our environment, behaviors and other aspects in which we live our daily life, and one of the biggest evolution that we have seen over the past 50 years has been in the field of sustainability.
Arguably, businesses have been one of the biggest force of positive and negative change in the last few centuries and sustainability, and as Katherine Healry of Guardian, business actions have evolved from “reacting” to sustainability issues to having sustainability as a “purpose” embedded as a core strategy instead.
The emergence of the Benefit Corporation, widespread adoption of UN SDGs or EU trying to make sustainable investment mainstream, all these measures are ensuring that businesses across the world are actively looking to combine purpose with profits in order to add value to the society.
What has individual action been focused on?
While businesses try to play their part, it is interesting at this juncture to evaluate the role that the individuals are playing in ensuring a better planet for tomorrow.
Well, we all want to consume sustainably, we recycle, we repair and we try to reduce our footprint on the planet by adopting renewable energy, taking trains rather than planes. While many of us are actively doing this, while at different stages in the journey to zero-waste living, what about the money we save? Our hard earned incomes, our allowances from parents when in college. How are they affecting the environment?
Puzzled….wondering how is sustainability linked to your savings?...well lets demystify this for you today..
To understand this, let's first understand how a bank works. You save money in a bank, whether it's your monthly salary, allowances or your income coming from a freelancing job.
The bank uses these savings to give out loans to individuals and companies who need it to buy a home or build a new manufacturing plant or explore a new oil well. The banks charge an interest for lending out your money to these individuals or companies and give you a small return for saving the money with them.
The difference between these two becomes the income for the bank. So a penny saved by you is a penny lent by the bank.
So now that we know how your money is actually deployed, let me tell you for instances where your savings led to financing of projects or companies that you might clash with your own value systems.
Let's take the recent forest fires in Amazon. One of the widespread fires in amazon ever, these fires were mainly caused by massive deforestation of the Amazonian rainforest done by agri businesses which lead to widespread nature of the fires. So the question is, did you or did you savings actually fund these companies?
As per Global Witness, between 2001 and 2015 over 300mn hectares of tree cover was lost across the world - that's a size as big as India!
Your savings did play a role in this because between 2013 and 2019, agribusinesses responsible for this deforestation, were backed to the tune of US$ 44bn by over 300 investment firms, banks and pension funds across the world.
For the Amazonian fires in specific, as per the EU Observer, European financial institutions funded over US$ 7bn of these companies responsible for the deforestation and the widespread fires. And yes those investments done are basically the money you saved!
Amazon forest fires is just one of the many instances. While you try to avoid palm oil given the massive impact it has on the environment in the food you eat, your income saved in a bank has been funding palm oil companies in Indonesia leading to widespread deforestation and destruction of natural habitat of the wild species such as the orangutan.
So, what can you do? While you are using a reusable container and avoiding plastic, avoiding harmful chemicals, do you know what your savings is actually funding?
How sustainable are you really?
As per research from Nordea, the impact of just moving your pension saving to a sustainable fund is 27x more on the environment as compared to changing daily consumption habits such as choosing a train over flight, reduce time to shower or eating less meat everyday.
So it is clear that it's not just your consumption of products that impact our planet but also savings and yes indeed you can have a larger impact through your savings. The good news is that there are options available today. Sustainable finance has been growing and so is the adoption of it by people like you and me. Today you can have a sustainable savings account, buy a house using a sustainable home loan and invest your savings in companies working towards sustainability goals that matter to you.
What can you do?
As per research done by mattrvest, more than 70% of EU citizens are willing to have lower returns if their savings are invested in alignment with their values. This is a clear trend that sustainability and finance is something that is the need of the hour.
So what can you do today? Here is a list of actions you can take today
- Click here and find out how sustainable you are today based on how you save today?
- Join a group of like minded individuals who want to make a different by joining us on Facebook, Linkedin or Instagram
- Subscribe to our newsletter and keep up to date with the latest news in sustainable finance and what we are up to
Why does your action matter?
The time is running out for us to protect our planet. As per IPCC, we only have 12 years to deal with climate change so the clock is ticking and its ticking fast.
Hence there is a need for action which is not just impactful but impactful at scale and yes your savings can help you achieve this change!
At mattrvest, we are on a mission to bring about this change and therefore we are building a community of like minded individuals like you who really care about changing the status quo and challenging the way our world works today.
Let's get together, voice our opinion, have open discussions and share opinions to kickstart this required change in our financial ecosystem.
Join us on Facebook, Linkedin or subscribe to our newsletter to join the movement and be part of the #mattrvestribe which is looking to democratize the world of finance while making sustainability mainstream to finance.