The World Is Starved Of Good Ecological Investments
A rewilding bond raises £2 million in 48 hours, showing that money is waiting for good eco-opportunities
Like many investors of late, I have been scrambling around trying to find investments that will bring in a rate of return without causing harm to the environment.
My goal is to create a truly regenerative portfolio and invest in ecologically sound investments, so that my money is actually making a positive difference in the world, not contributing to the current mess we find ourselves in.
But these kind of investments are really difficult to find on a global scale, because of the financial systems that we have built up over decades, how we think about returns, and because most of the work happening to reduce the risk of climate change is non-profit (i.e. it is risk mitigation, not profit generating).
However, that isn’t to say that the world and investors aren’t interested in ecological projects, rather there just isn’t enough of them offering any form of rate of return to divert capital from other industries.
How to raise £2,000,000 in 48 hours
In September of this year, Triodos Bank’s crowdfunding arm listed a new bond offering to finance a rewilding visitor centre in Scotland. Trees for Life, a conservation charity focused on the regeneration and restoration of the Caledonian Forest in the Highlands of Scotland were raising money to fund a visitor centre and accommodation with the long term aim to get more people closer to nature, exploring the region’s wildlife, learning, and getting involved with rewilding.
They were offering the bond at 6% a year for 9 years. As with any investment, there are risks involved, but to put things in perspective with today’s other offerings, 6% a year is comparable to investing in the stock market, a good return on a buy-to-let property, and much more than any government bond currently on offer. Plus the money is actually being used for something I believe would make a positive difference, and something that I will definitely visit once completed. So I, like many others, scrambled to get registered on Triodos’s crowdfunding platform and buy some bonds that would actually green my portfolio.
Unfortunately, I didn’t get registered in time and within 48 hours £2 million had already been pledged to build the rewilding centre. I joined the waitlist in case they released more bonds, and while I am slightly disappointed that I didn’t get to be part of this, I am glad that it was fully funded. It’s also a very strong signal for other potential green investments.
Can you make regeneration profitable?
Investors think in terms of return; a.k.a. money making money and compounding interest. Regardless of what you as an individual think the role of money is in society, investors primarily look at returns. Therefore to get money flowing into regeneration, rewilding and renewal projects you need to make it attractive to investors.
So many people jumped on the Trees for Life rewilding centre bond offering for two reasons. 1) because it was contributing to a better future and, 2) because it was offering a great rate of return in today’s climate. I am convinced that the bond could have been offered at half the rate, e.g. 3% per year for 9 years, and they still would have reached their full funding target. In fact of Triodos’s 28 crowdfunding projects in the last 2 years, only 1 of them didn’t reach full funding.
One of the big barriers to entry in terms of investing in ecological and regenerative projects is that most of them don’t need £2 million in funding, and others don’t have visible monetary returns. Local projects need a way to reach local people, so instead of millions, they could be able to raise thousands of pounds to create better local environments.
For example, investing £20,000 into restoring a local park can have great value on the health of the area, wellbeing of local residents and reduction in air pollution, but that isn’t measured in monetary returns. However, like one of my local parks, if you were to add a local petting zoo, mini golf and cafe stand, then there would be money generated to repay the initial investment. The same can be applied to re-zoning dead land for allotments — once the initial investment in the soil has been repaid, the allotments can be rented and investors of the project can receive a return.
Other times, the idea and plan can come first and the investment will follow. Boyan Slat is a young entrepreneur who came up with the idea to use the oceans natural currents to collect plastic waste and pull it out of the ocean. He presented his idea at a TEDx talk, and then started his own company called The Ocean Cleanup. He first raised $2.2 million from a crowdfunding campaign to get the project started. Paypal co-founder Peter Thiel gave him a fellowship of $100,000 to help his idea. The King of Norway awarded him a Young Entrepreneur Award and Forbes included him in their ’30 under 30’ list. To date he has received millions from companies in Silicon Valley who believe in his theory that ‘technological innovation is a way to enhance our human capabilities’.
What about traditional finance?
Triodos is unique in that it is a fully regulated bank in Europe, and so it has a vital crossover of knowledge between how the traditional investment world works and a focus on ecological principles, cultural respect and on people and the environment. In short, they understand the need to move money to finance better projects that can improve our climate and local environment.
Wall Street and the largest funds have jumped on the green train in the last few years, and with environmental, social and governance (ESG) corporate policies and ESG exchange traded funds becoming very popular. However, BlackRock’s ex-chief investment officer believes ESG and green funds could have zero impact on climate change because “there is no connection between the two things”.
“It’s not because they are evil, it’s because the system is built to extract profits,” he said to the Guardian. “In many cases it’s cheaper and easier to market yourself as green rather than do the long tail work of actually improving your sustainability profile. That’s expensive and if there is no penalty from the government, in the form of a carbon tax or anything else, then this market failure is going to persist.”
The current investing system we have wants to continue doing business as usual for as long as possible. The unfairness of how money makes money is best left to a different argument and one that can be solved with taxes, but for the sake of making a difference in where money is invested, we need more truly green investments and we need to think more like investors.
As individuals, we now know what is happening to our planet through climate change, and we are starting to feel first-hand the effects. We are starting to wake up to who is responsible for the most damage, and to the link of where our pensions and ISA’s & 401k’s are currently invested in. For lack of better options, the ESG funds packed with greenwashed companies are the winners of today — but with projects like Triodos’s crowdfunding platform, tomorrow could see rewilding and regenerative projects gaining prominence and investment money.
Do your ideas need funding?
If you can find a project that can plant trees, sequester carbon, regenerate local communities and/or reduce pollution and waste, then there are millions of pounds waiting for you. Even local community projects can raise money, with the benefits going back to the local community. Regardless of the initial investment amount needed, if you can offer a 5% return on initial investment today, then people will be lining up to fund you. It’s time to dream a little bigger and not let money be a limitation, rather start looking for money to fund your projects.
“If you establish, or re-establish, local economies on the right scale and with the right standard, then politics would come right as a matter of course. I don’t know what you’d call the result — probably not capitalism or socialism.”
- Wendell Berry,
