Investments are a statement about the future, they predict the future...
...but they also create the future
The financial system shapes the very conditions of life on earth. It guides labour practices, our treatment of delicate ecosystems, and our responses to climate change. To ensure a safe, sustainable future for all of us, our financial systems need to change quickly and dramatically. Positive investment involves taking this urgency seriously.
Positive Investment strategies prioritize getting funds into sustainable, life-enhancing solutions, whilst finding smart, targeted ways to get rid of damaging economic habits. It is any investment strategy that contributes to the wellbeing of people and the planet – a positive vision of the world we want and how to get there, not just a response to the futures that we fear or the developments that we oppose.
Fossil fuel divestment may grab headlines, but a Positive Investment approach looks beyond this, to provide a broader toolkit. Positive investment can be achieved in a variety of ways, from direct green investments (green bonds, energy efficiency and/or renewable energy financing), to a variety of investment process reforms (collaborative shareholder engagement, SRI funds, divestment and more). What's common across all of Positive Investment however, is the drive for targeted, extraordinary improvement in the way capitalism functions.
Much of Positive Investment is driven by the urgent need for a response to the threat of climate change, however, the world that PI envisions also includes fair labour standards, reduced lobbying by arms dealers, and a better democracy.
Who controls a company?...
Forceful stewardship is about governance. In theory, control of a company belongs to its owners (the shareholders), however in practice this power is not usually exercised. Forceful stewardship is when shareholders do use this power, particularly via voting.
Socially Responsible Investment Funds
SRI funds invest selectively in companies deemed socially responsible. Some avoid certain companies (a negative screen) and others actively seek out companies that meet their ethical standards (positive screen). These have become increasingly popular with the rise of the fossil fuel divestment movement.
Green Bonds, Pooled and Venture Capital Funds
In comparison to structural changes in investment and governance practices, funds can also be invested directly in green initiatives. Investment vehicles for such initiatives include pooled renewables funds, green bonds, and green venture capital.
Energy Efficiency Financing
Energy efficiency financing is particularly notable as a Positive Investment strategy for its high financial returns. Building owners can take a loan, retrofit their properties to use less energy, and the savings exceed the required payments for the loan. In terms of investment vehicles, Green Bonds or a Green Revolving Funds (GRFs) are two ways of facilitating these loans.
Divestment is the act of selling one's shares in a particular company, usually performed for ethical reasons. Today, the renowned fossil fuel divestment campaign has exceeded $7 trillion (10% of global stock market) in divestments from hundreds of universities, municipalities, religious institutions, and foundations. It has grown faster than any other divestment campaign in history.