Written by Søren Rahbek, Director | The 20th of September 2022
These are in many ways challenging times. War in Ukraine, rising inflation and unusual weather patterns all lead to increased uncertainty and reconsideration of expectations. The uncertainty comes at the time where financial institutions are in the middle of changing the way investment advice is given and where investors are expected to make significant contributions to the change towards a more sustainable economy.
This change is made difficult by the still limited access to data on the sustainability performance of companies and investments. The lack of data also makes the dialogue with retail investors somewhat difficult – and it was not easy to start with. It is difficult to explain the many new concepts and the new, intertwined regulation. And the lack of transparent data.
The war in Ukraine has changed the outlook for a green transition. The impact of the war on not merely the price of natural gas, but directly on the access to gas, regardless of price, has had unexpected consequences. Nuclear power is becoming relevant to discuss, not just whether it can be considered green, but rather whether Europe can live the life we expect without it.
And for many companies and utilities, the back-up sources of energy will be fossil-based. Even coal is making a comeback and private households are stocking wood for fireplaces.
This obviously has impact on the attraction of traditional energy investments.
You can argue that we have all taken a ride in Maslow’s hierarchy of needs. If we are facing a risk of being cold and living in the dark, it is difficult to discuss long-term sustainability or gender equality at board level, even when it is as important as it is.
It is somewhat more difficult to accept that the war in Ukraine also will lead to significantly increased demand for weapons in many forms. But with an increased awareness of the fragility of the Western liberal democracies, the need to defend ourselves and participate in alliances such as NATO, creates an imperative.
And where does that leave the move towards greener investments? In short, it is now that not only politicians at all levels, but also the financial sector must prove the commitment to playing an active role in the transition. The sector must maintain a pressure on investee companies to provide the necessary information and data on sustainable performance and in return, ensure available capital for the long-term investments in greener energy.
We need to be able to explain the common journey and the need to invest in a better future. If there ever was a time to use the TINA abbreviation, it is now – for truly, there is no alternative.
How CMP can help
At CMP we are happy to be part of many ongoing projects at investee companies and fund managers. A lot is happening, but all seems to struggle with the new terms and regulation. We like to participate in any discussion that might facilitate the transition – and the long-term target of guiding capital towards a sustainable future.
Without long-term thinking, there will be no long term…
Our name, Capital Market Partners, reflects what we define as our core service: Business understanding based on extensive experience in applying technology in the capital market area.
As a business partner, we offer consulting services based on our combination of business understanding and IT know-how. Our work analyzes, implementation of IT systems and other projects supports strategic decisions at different levels in complex business contexts.
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