This week’s Economist (May 7^th-13^th) covers an article “A lighter shade of green”. It states that the UK government, unlike voters, remains keen on environmentalism. As an example reference is made to the creation of a green investment bank to finance carbon-free energy projects. However it is also concluded that the government “knows not to shout about environmentalism”. The recession has left the subject looking like an unaffordable luxury. Making too much noise risks alienating squeezed voters.

 

The Dutch Financieele Dagblad (May 10^th) refers to research for WWF which shows that the national sustainable energy sector is not keeping up with other countries. Whereas this sector has grown by 31% globally, in the Netherlands it only grew by 15% between 2008-2010. The lack of government support and especially the inconsistency of policy is hurting the investment climate, according to the research .

 

At the same time the Financial Times reports that “ESG analysis is a must in emerging markets”. (FT May 9^th). A study shows that all portfolios would benefit from managing ESG risk, but it is in emerging markets where the degree is most acute. “Tail risk” –the risk of unlikely events causing catastrophic damage- can be reduced by nearly 40% in an emerging markets portfolio that has limited exposure to ESG risk. It is a challenge to get this right, but apparently there is an increasing market incentive to at least try this.

 

Bloomberg seems to agree on the changing market opportunities. It has recently published its first sustainability report. According the Bloomberg’s chairman: “sustainability is central to our core values and provides competitive advantage”.

 

Moreover,  this week DSM CEO Feike Sijbesma has been awarded the prestigious George Washington Carver Award for Innovation in Industrial Biotechnology in recognition of his outstanding contribution and vision to the development and innovation in industrial biotechnology. In his keynote speech Sijbesma said a green industrial revolution is needed to feed and fuel the future. He explained how DSM has a vision on the needed changes over the next decades and how it is committed to adapt to these new needs.

 

Interesting how DSM has a long term vision an plan to act, whereas politicians are dealing with short tern cycles. Do markets offer better conditions for greening than politics? Changing market needs (of which several examples have been mentioned) and the opportunity to create a competitive advantage are crucial drivers. Too bad to voters don’t always appreciate green initiatives. Too bad that governments not always provide consistent policy framework. However this will not stop companies from servicing new clients’ needs. Step by step the transition towards a more efficient and clean economy is happening.