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Sustainable investments

Do we want to go back to normality?
Last year was memorable in many ways but it was not really a year that anyone would like to repeat any time soon. Yet it hasn’t been all doom and gloom. It has become very clear that not everything we considered “normal” was actually good for our personal health, global prosperity or our planet.

It’s time to redefine “normal”. If we reboot our society and economy, there is a tremendous opportunity to create a world that is happier, healthier, more ethical and with a higher level of equality. But it will take a lot of courage, cooperation and a great deal of strength to achieve this.

Company responsibility
Sustainability was initially embraced by many companies because it scores highly with the public. But it turns out that the public are not that easy to fool. Serious guidelines have now been drawn up: the so-called Environmental, Social and Governance (ESG) standards.

Larger listed companies are adapting their policies, which is good news for investors. The various investment parties have also developed special investment funds for sustainable investment. At Hugo Investing, we have also noticed that our clients are increasingly opting for sustainable investments.

The challenges
Companies will most likely always brag about the ESG goals that they achieve. That’s normal. But at the same time, there will always be certain ESG goals that they grapple with – some companies are simply better able to achieve certain goals, and no company can be expected to achieve each goal on its own.

In the future, companies must seek help and work together to achieve their ESG goals. A good example is in the pharmaceutical industry where companies often depend on pure water for the production of medicines. Pharma organisations could work with startups like Desolenator, which use solar energy to make affordable drinking water from the sea, instead of tapping existing water sources.

2020 has changed people’s priorities in countless ways. Many consumers now have an even greater preference for sustainability and are demanding this from producers. Research in the UK shows that 73% of customers now expect online retailers to use recyclable packaging. More than a third of consumers only buy products that are made from natural raw materials and/or originate from the natural environment. Four out of five Texans now believe in climate change.

With this in mind, low prices will certainly be questioned more than ever. In 2021, companies will need a full understanding of their supply chain so that they can ensure they act ethically and sustainably.

Collaboration on a large scale
Companies working together to achieve their sustainability goals is one thing, but to achieve global goals, such as reducing the temperature rise to 1.5%, will require entire industries to work together.

The United Kingdom, for example, has decided to supply all homes with wind energy by 2030. To achieve this goal, a huge amount of infrastructure will have to be set up.

The rollout of electric cars faces the same problem. As 2030 approaches, the demand for infrastructure materials and services will grow exponentially. This includes things like charging stations, roads and wind turbines. Flexibility and cooperation will have to become the new normal.

Courtesy of input from Forbes Magazine

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Kaspar Huijsman is founder and director of Hugo Investing (former Binck Bank Spain) and is also a passionate investor. In his columns, he writes about his experiences with both the stock market and the economy. If you have a question, please email kaspar@hugoinvesting.com.

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