The significance of financial investments in contributing to an individual's or organisations carbon footprint is frequently underestimated, yet the positive impact of informed investment decisions on greenhouse gas emissions is substantial.
Mindful Money
Mindful Money, a New Zealand based independent charity, aims to make money a force for good. They are at the forefront of advocating for sustainable investment practices. These practices not only aim to alleviate the negative effects of climate change but also aspire to cultivate a more sustainable economic future for the nation.
Also, the formation of the Aotearoa New Zealand Investor Coalition for Net Zero by Mindful Money unites asset owners, wealth managers, and fund managers under a common objective: to adhere to internationally recognised Net Zero initiatives. This coalition shows a collective commitment to a more sustainable investment environment.
Mindful Money have a free tool available to help you understand how ethical and impactful your investments are. Their “Fund Checker” gives you a breakdown on what's in your KiwiSaver or Investment fund. Click on the link and search for your fund in the drop down menu and find out.
Source: https://mindfulmoney.nz/
Move away from fossil fuel investments
The investment sector's role in global carbon emissions, particularly through investments in fossil fuels, is well known. Nonetheless, divesting from these sectors is not necessarily detrimental from a financial standpoint. Emerging evidence suggests that transitioning away from fossil fuel investments can be a prudent financial decision, especially considering the escalating risk of such assets becoming obsolete as the global economy pivots towards renewable energy sources. This transition is not only imperative for climate change mitigation but also for investors aiming to protect their portfolios from the depreciating value of fossil fuel assets.
Furthermore, the contribution of KiwiSaver funds to New Zealand's transition towards a sustainable economy warrants attention. These funds represent a significant portion of New Zealanders investments. The evolution from merely ethical investment practices, which traditionally exclude sectors with negative impacts, to responsible investment practices underscores a broader transformation in the investment landscape. Responsible investment practices are characterised by a proactive approach, emphasising investments in companies with robust Environmental, Social, and Governance (ESG) standards.
Achieving net-zero emissions by 2050 poses a significant challenge for New Zealand, necessitating a concerted effort across various sectors, including the finance sector. The required shift in investment patterns highlights the need for a sustainable finance framework that supports investments congruent with a low-emission, sustainable future.
Conclusion
In summary, the connection between financial investment and carbon emission reduction presents significant opportunities for improving environmental impact in New Zealand. Initiatives such as the Aotearoa New Zealand Investor Coalition for Net Zero, coupled with an increasing focus on responsible investment practices, exemplify New Zealand's leadership in demonstrating how financial markets can contribute to the global effort against climate change.
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