This year finished with a lovely pile of gifts delivered during 2015 that we can unwrap as 2016 unfolds. With any luck we will use those gifts, the products of fiercely hard work by so many people, to create even more gifts for our children and their children. Which is what it’s really all about at this time of year, whatever you call it.
Here’s a few of our favourites:
Green money. This unexpected bounty and powerhouse of change has taken the capital markets by storm and the old guard by surprise. The impact is as fast and furiously disruptive as the fall in energy consumption was to the old fossilised fuel powers. It will make Uber look like part of the establishment (which it’s rapidly becoming).
Green money is big super money, the huge institutional investors stuffed to the gills by the compulsory and voluntary superannuation of the world’s workforce.
It’s the kind of money that increasingly seeks out green low-emissions infrastructure such as heavy rail, light rail, wind and solar farms. Exactly what the developed and the developing world need as we move ever faster into cities.
It could also include amalgamated energy efficiency programs that appeal to green money’s appetite for scale. Or even home solar programs. The (blue clean) sky’s the limit.
Green money – green bonds, climate bonds, sustainability-screened finance – is the genie that’s popped out of the bottle. The unsolicited offer no government will be able to refuse. And it won’t be looking to build casinos or tollways.
Our Green Bonds and Property ebook released last week could not have been better timed. With the salon held in London in the excitement leading up to the COP, published in the excitement following COP, it’s a book that will feed a hungry appetite for how this new asset class works.
How big will it be? ANZ’s Cath Bremner put it this way: her bank has committed to $10 billion of green investment over the next few years; Morgan Stanley to $100 billion.
And for another taste of what’s on offer ABN Amro said every property deal from now on would be put through a sustainability lens through its partnership with the Global Real Estate Sustainability Benchmark. Why? Because it makes sense to factor in things like climate risk, building regulations and tenant preferences, it said.
A highly positive COP21. Despite the increasingly blithering protestations of spent forces such as Alan Moran of the Institute of Public affairs who still has the gumption to claim the climate science is wrong, the world agreed. Whether this was wishful thinking or a promise is of less importance than the signal, the sentiment.
The time of buildings
At COP21 buildings and cities finally started taking their rightful place as the world started waking up to the fact that if you want to slash carbon emissions, the buildings you live work and play in is a pretty good place to start.
A new PM – In Australia new PM Malcolm Turnbull signalled the same sentiment as COP with the Lib’s first ever minister for cities and the built environment.
Battery and technology
Turnbull also mentioned innovation and technology which everyone in the green space hoped was code for clean energy (coded lest the anti climate faction in his party got wind of the direction.)
Tesla also emerged on the consumer front and shook the old guard to its core. Likewise the realisation that the world’s innovation and venture capital money is highly focused on disruptive new energy supplies. On Tuesday Tesla announced it had teamed up with solar hot water stalwart Solarhart.
One of the loveliest presents that started unfolding during the year was transparency.
At the macro level you could see it in the divestment movement that like its sibling, green money, will only get stronger.
At the micro you could see it in the emergence of the WELL rating system and the fabulous call out from some related research that said “Sitting is the New Smoking”.
Transparency also started to reveal itself (pardon the contradiction in terms) in the gathering steam of calls for better enforcement of standards in buildings, in buildings that performed as well as they were designed and in the Green Building Council’s performance rating tool starting to gather pace.
There’s a lot of frustration though, as we move from great expectations to “show me the money”. Or evidence of better outcomes.
Coming in at the end of the year was another big tilt to transparency with the massive eight part series by Jeroen van der Heijden examining the effectiveness of voluntary programs, expected to form the basis of a book.
Guess what? We need both voluntary and regulatory programs, van der Heijden concludes.
Congruence, the near cousin of transparency will be another trend to watch in the coming year. At the macro level we saw it in the rise of the movement against child abuse and domestic violence – with men (it’s mostly men) who stand tall and proud in the community, but behind closed doors feeling free (and often protected and enabled) to wreak havoc on other people’s lives.
At the micro level it will be interesting how this impacts on companies that might occupy a six star building but who produce products that damage or kill people (coal miners for instance, or Coke). Or companies that do wonderful, sustainable, energy efficient, clean energy work through one subsidiary and in another allow people to be harmed or die from the side effects of their operations.
It’s true we are all complex, imperfect beings – corporates included – with most of us maybe on the same journey, but at different speeds or sometimes powered by different qualities of knowledge or resources, but is it too dreadful to gently point out that our behaviour is sometimes not congruent?
Westpac, for instance, which scooped global brownie points (we should probably call them greenie points by now) by saying its future actions would be consistent with keeping warming of the planet to 2 degrees.
Before it’s chairman Lindsay Maxsted soon after saying it was OK to still invest in coal mines.
“It’s very hard to see how scientists could say one particular project could push us over two degrees,” he said at the company’s annual general meeting, of all things.
Oh dear, the Tony Abbott defence: If I do the right thing, it will have such little impact on the scales of balance, I may as well do what I’ve been doing forever.
The thinking behind this is “the rest of the world will hardly notice.”
But this would be wrong. And this is where the Westpac chairman is wrong. He’s looked at only half the story.
The world does notice. And the impact of noticing Westpac has chosen to NOT invest in a new coal mine is likely to be enormous and to overall save much greater greenhouse gas emissions than the amount of emissions created by funding a new coal mine.
And what negative effect exactly does the chairman think not funding the coal mine will have on the overall welfare of his shareholders? Would they even notice?
So we need not just transparency but 360 degree thinking. Systems thinking.
This chairman might have been perfectly adequate in the old economy. But he’s probably not quite up to the task of the hugely complex challenge that lies ahead if he cannot work out some simple logic and look at his statements from even a 180 degree point of view.
We don’t have time for lineal thinking any more.
But to be fair to this chairman it’s relatively easy to measure the sum of emissions from a single coal mine. But much harder to measure the impact of influence of not investing in it.
Which doesn’t mean it’s not real. Economists will tell you that’s why they can’t call their profession a science, because it involves human/social influences and thing called sentiment which responds to influence. It’s also why economists are so often wrong in their forecasts because they are used to measuring and mapping trajectories, but they can’t measure and map sentiment. Think about an investment bubble that goes on way after closing time, or a recession that persists despite better fundamentals.
It’s where the science on climate fails us. It can tell us about the technology and mechanics of tackling climate change but it can’t tell us what kind of political firepower we need to make the changes happen.
That’s our job. All of us. So rest up folks. There’s loads of work to do in 2016.