The route to sustainability is full of potholes. Never more so than in 2022. Yet more of us are following our sustainable values. We are encouraged by our friends, inspired by (some) leaders, bolstered by breakthroughs and flashes of human genius and endeavour.
So I wanted to give you a Christmas GIFT to celebrate some of the most significant positives of 2022.
G – for growing green energy
I – for inspiring innovation
F – for funding fossil fuels (it’s behind you!)
T – for Tax and Treaties to the rescue.
Growing Green Energy
For wind and solar, we have seen capacity rising and prices falling. Yet, events in 2022 have provided a further tailwind for turbines and some sunshine for the panels.
In the US, we had the Inflation Reduction Act. This included almost $400 billion in funding for clean energy, electricity, and transport. In Europe, the REPower plan. This aims to reduce dependency on Russian fossil fuels and fast forward the transition to clean energy. In India, the government has announced funding support for businesses developing solar power infrastructure and components.
Combined, the world is estimated to generate over 300 gigawatts of clean energy in 2022, compared to around 175gw in 2017.
Inspiring Innovation
When the going gets tough, the tough get going and when the human race faces a massive challenge, it finds solutions to fix it. In 2022, we saw significant developments in the campaign to capture energy from nuclear fusion and in carbon capture technology (albeit it at a very early stage).
The funds held within the Somerset Wealth portfolios invest in many companies that develop new technology. One example is “Alfen”, whose products include smart grid solutions, energy storage systems, and EV charging infrastructure. The company invests significant amounts into Research and Technology and its products have delivered clean power to over 200,000 families.
(Not) Funding Fossil Fuels
With clean energy now largely less expensive than fossil fuels, it’s clear they are neither a sensible long term energy solution nor investment.
Depending on your preferences, we can offer Somerset Wealth portfolios which do not invest in the shares or debt of companies extracting new oil and gas. However, many banks around the world continue to provide finance to these companies. Many people campaign against this, from climate activists to investment coalitions. This year, new regulations against greenwashing have also lined up to oppose fossil fuel producers who unfairly claim to be sustainable.
As a result of various pressures, HSBC declared this month that it would no longer finance new oil and gas fields. It had invested an estimated £6.4 billion into new oil and gas in 2021. Lloyds Bank made a similar announcement in October and campaigners hope this will send a signal to other UK banks – Barclays take note!
Tax and Treaties
In the world of finance, we work with our clients to manage taxation. In pursuit of sustainability, however, the right tax applied in the right way can be a valuable tool. This month, the EU struck a deal on a world-first carbon border tariff that taxes imports of polluting goods such as steel, cement, and fertiliser from overseas.
In finance, regulation is there to protect consumers, such as the new rules proposed by the Financial Conduct authority for 2023 to stamp out greenwashing. This year has also seen new policy, at Biodiversity COP15 in Montreal, to protect nature. Nearly 200 countries signed an agreement to protect 30% of the planet’s land, water and ecosystems by 2030, a plan known as 30 by 30.
As with all multi-government agreements, there was compromise and a question remains over whether the signatories will follow through. Nevertheless, this does grant nature and biodiversity loss a much better seat at the policy and finance table, alongside climate change. We look forward to seeing what solutions will develop in 2023 for funding nature positive solutions.
We see therefore that 2022, despite its ongoing global challenges of war, inflation, environmental, social, and political upheaval, has brought us reason to be sustainably hopeful.
Sustainable Wealth
Finding your own path to Sustainable Wealth isn’t just about doing good with your money. It’s also about making sure you don’t live too long. You may laugh but think about it. You build wealth through your lifetime, you invest sustainably, you retire and start spending your money… which will eventually run out. Will the money run out because you lived too long?
Our Sustainable Wealth Blueprint answers that question, and others, to set you on the path to nourishing your wallet, as well as nurturing the planet.
www.somersetwm.co.uk/call for to get in touch.
*Please note that capital is at risk and Somerset Wealth’s investments are designed for the long term.
Policy, climate, war make 2022 ‘pivot year’ for clean energy | AP News
The Biggest Tech Innovations And Breakthroughs Of 2022 (forbes.com)
HSBC to end funding for new oil and gas fields – BBC News
EU strikes deal on world-first carbon border tariff | Reuters
Cop15: historic deal struck to halt biodiversity loss by 2030 | Cop15 | The Guardian
