Opinion: How investors can get the measure of green projects

green projectsEffective qualitative and quantitative measurements will offer investors a transparent view of their investments’ outcomes and encourage continued funding for green projects, says Muhammad Malik, CEO and Founder, NeuerEnergy.

In a commendable push for a greener future, the UK Government is taking a world-first step to offer a Sovereign Green Bond and lead the way toward sustainable finance. The bond will give UK savers the chance to support green projects, and when almost three-quarters (72 per cent) of the public are uncertain whether their savings are invested in line with their environmental outlook, this step will help the nation make more informed, sustainable financial investments.

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As part of its strategy to ‘build back better’ and achieve net zero carbon emissions by 2050, the UK Government has renewed its focus on the environment and announced a host of new initiatives to build a sustainable infrastructure, while supporting green energy sources. From investment in offshore wind farms in Humberside and Teesside to making London a global hub for trading voluntary carbon offsets, there is a clear plan to achieve strong environmental progress ahead of the 26th UN Climate Change Conference of the Parties (COP26) in November 2021. In another first, Chancellor Rishi Sunak has also invested £12bn to establish the UK Infrastructure Bank; to be based in Leeds, the bank is being set up to attract £40bn in private sector finance for local authorities, green initiatives, and digital projects.

The UK Government is taking large strides to endorse environmentally-friendly assets, but the true challenge is ensuring all of these ambitions are realised – which means not only securing the right investment, but requiring 100 per cent transparency and accountability to ensure the full effectiveness of these initiatives.

How to attract investors: Unite quality and quantity

Investor interest in sustainable projects is on the rise. In fact, more than one in five UK investors turned to impact investment in 2020, to address social, environmental, and economic challenges. Over a third (35 per cent) of these were aged 35 and under, indicating that this move toward ethical investment is due to grow with future generations.

To support this shift and ensure effective green initiatives, both investors and investees need to prioritise complete transparency and accountability. Greener finance is more than simply making the best investment – it’s about making the right investment for all. So how can investors be certain they are truly making an environmental impact?

Achieving true sustainability is a multifaceted goal

Whether backing alternative energy sources or more sustainable waste management solutions, a fusion of qualitative and quantitative measurements is necessary to monitor outcomes. The value of quantitative metrics stems from their reportability; checklist-style scoring offers investors an aggregated view of results, which is particularly advantageous to limited partnerships (LPs) with many holdings. Qualitative commentary, meanwhile, gives deeper insights into individual companies’ stories and the priorities that matter to them. Together, these two measures can provide investors with clear, tangible impacts that verify they are funding strong initiatives.

Technology is a catalyst for achieving green goals

Technology platforms will become a fundamental part of delivering these measures and directing funds toward environmental objectives. Achieving true sustainability is a multifaceted goal, meaning investors need the ability to cross-reference and track results across multiple, interconnected targets. Real-time intelligence can also provide short and long-term predictions for investments, as well as safeguard ongoing sustainability by prescribing actions based on these insights.

Alongside providing greater transparency into the progress of environmental initiatives, technology platforms will help align both private and public investment policies. It is crucial that all interest groups have a standardised view on green investment – both what it is and what it should achieve. With a common understanding of goals, all parties can develop a balanced strategy that meets their needs while also realising change.

As COP26 approaches, the pressure will rise for the Government to deliver on its green promises. With the conference situated in Glasgow and the recent Spring Budget announcements, the UK is now centre stage for environmental progress. Addressing sustainability through finance and infrastructure is a smart move to inspire long-lasting growth, but technology will be an essential part of attracting further attention from investors.

A combination of effective measurements, both qualitative and quantitative, will offer investors a transparent view of their investments’ outcomes and encourage continued funding for green projects. By furthering standardisation and clarifying goals, technology platforms will also align interest groups and enable a collective approach to achieving the greener good.

Muhammad Malik, CEO and Founder, NeuerEnergy