Are you investing in a more sustainable future?
Below, we are revealing and discussing key points from the JP Morgan article.
As we move into 2023, sustainable investing is coming under more scrutiny than ever before, not just from investors and activists, but also from regulators and policymakers.
It's crucial to be aware of the different shades of sustainable investing. Understanding how credible sustainable solutions can have a real-world impact makes all the difference. That's why we believe transparency and traceability are key to making informed investment decisions. We back this up by providing full access to all data for all of our products.
According to JP Morgan's ESG Outlook 2023, there are five sustainable investing themes that they believe will matter most to investors in the year ahead.
Growth in sustainable investing will continue despite market volatility, with ESG-related regulations being a key demand driver. This mega-trend will continue - but more holistic ESG metrics are becoming the norm, going way beyond "carbon".
It's crucial to differentiate between ESG strategies targeting innovative solutions and those strategies that exclude companies purely based on values or political views. For us, the point here is this: there's "signalling" and there is "impact". For investors, innovation and impact should take precedence over pure label games. Sure, having policies in place can have an impact too, but the proof is in the action and the measurable impact on realistic ESG metrics.
Investors are actively looking at ways to achieve negative portfolio emissions and nature-based carbon offsetting solutions, such as forestry. However, there is an ongoing and important debate around how carbon offsets which should be accounted for. In other words, quality and provenance for offset and impact projects matter - a lot.
The transition to an economy powered by clean energy is likely to have some inflationary impact, given robust fiscal support (read: public funding) and the high level of new investment flowing into technologies such as wind, solar and electric vehicles. Obviously, makers have an important role to play in encouraging investment and providing finance to climate adaptation projects. Let's also note that adaptation measures to climate change will also have massive inflationary impact. The question is, can we scale a sustainable transition fast enough to reduce future need for extreme adaptation measures? We founded Nomica to provide the market infrastructure to scale action towards the SDGs, so we believe, yes, it is possible.
Lastly, many of the new greener technologies being developed require substantial inputs of a variety of minerals, which are often found in only a few places around the world. The human rights and child labour issues that are rampant in the supply chain of some of these minerals need to be addressed, and investors are increasingly demanding that companies conduct rigorous due diligence on suppliers, including regular audits. In addition, the extraction of these minerals carry a substantial carbon footprint as well as ecosystems costs, which have to be priced into the overall impact calculation.
At Nomica, we are committed to engaging with individuals and enterprises on these important issues and partnering with our peers, policy makers, and the broader financial industry to providing certified ESG products directly contributing to the energy transition. We believe that by staying focused on transparency and traceability, we can make a real difference in creating a more sustainable future. Our holistic ecosystem services, biodiversity, carbon, and social impact digital certificates are designed to address these issues and provide convenient and transparent access to high quality impact projects around the world.