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A “net-zero” ambition can be guided by a “zero-net-worth” environmental philosophy effectively steered by the FS sector

Kamal Mishra

“Being rich is not measured by how much one has, but how much one can give.”

Words of wisdom such as these may have stirred up emotions over the ages, but a true interpretation warrants some judicious soul-searching.

As we stand together in a moment of reckoning while the world gravitates to a more conscious, empathetic, and inclusive way of life, climate matters and environmental issues take utmost precedence. Relentless pursuit of profit over sustenance has tilted the scale towards massive debilitation of earth’s resources and environmental degradation. As stakeholders look up and rush in to salvage the consequences stemming from years of indifference, it may need more than just an endorsement or inconsequential plainspeak.

While wealth generation has played an important role in the evolution of mankind, it has come at a terrible cost, one that has pushed the environment to the brink of disaster. CO2 emissions have been projected to touch 43bn metric tons, the carbon footprint equivalent of 200 nuclear bombs, by 2050.

Net-zero ambitions galore in a world struggling to remediate the impact of the virus, as firms chart out visions to shunt out all direct and indirect emissions. Firms have been reporting their achievements in this context through their Carbon Disclosure Project (CDP) and Global Reporting Index (GRI) alignment.

In December 2019, 631 financial behemoths had congregated in Madrid as part of the United Nations Climate Conference (COP25) to pledge $37 trillion in assets to fight the climate battle. Unanimously, they had called out to the world leaders, institutions, regulators to expedite all means and mechanisms to address the climate issues. Bloomberg estimates $2.66 trillion at the center of fossil fuel financing by 35 leading investment banks since the Paris Climate Accord in 2016.

Net worth in accounting terms is a simple calculation, assets minus liabilities, or in other words, everything we own minus everything we owe. Extending this principle to our environmental analogy, I opine, we can replace assets with “consumption” and liabilities with “preservation and restoration” in a symbolic deliberation. A zero net worth would inherently mean, the consumption metrics in unitary terms need to be offset commensurately by preservation and restoration.

Hence, a “Zero-Net-worth” environmental philosophy would juggle profitability and sustainability through a counter-balancing act so that they complement each other as an epitome.

It is a simple yet very powerful concoction, which, if we can embed into the very fabrics of our lifestyle and societies, families and children, will have a recursively positive effect on mankind for generations to come.

In my opinion, the illustrations hereafter, can characterize the essence of a “zero-net-worth” environmental policy.

Financing the circular economy

The circular economy is based on a regenerative approach where consumed assets circle back into re-utilization thanks to recycling, repairing, reusing, or refurbishing. This process renders large-scale, continuous industrialization redundant in favor of need-based optimal production, resulting in lower emissions and effluents. Leading insurers such as Groupama, Allianz, Folksam have been promoting a “repair-rather-than-replace” protocol in claims settlements pertaining to motor parts. Groupama had reportedly repaired 33.8% of bumpers and shields on cars tied to their insurance policies in 2019.

US Insurer Hartford recycled 4,250+ e-devices in 2019 and ensured no e-waste ended up in landfills.

Embracing green design and IT

FS firms are actively encouraging consumers to move to energy efficient homes having floated innovative products and offerings while aligning their own corporate premises and commercial properties to leading green certifications such as BREEAM, LEED, HQE, ENERGY STAR.

Barclays was the first major UK bank to launch a green home mortgage, offering lower rates for properties that comply with energy efficiency standards.

Similar initiatives tied to competitive green mortgages have been reported by leading banks such as Nordea, ING, BNP Paribas and Société Générale.

ERGO, belonging to Munich Re, deletes redundant data at regular intervals to reduce carbon emission. 9,056 GB worth of data garbage was deleted across 10 geos as part of “bit-away-days” in 2019 (deleting unused data takes less storage space and in turn consumes lesser energy to operate and cool systems).

Carbon consciousness grafted into lifestyle

My Carbon Action is a transaction-oriented tool from Eufuce offered to banks, merchants and FS providers, that calculates the CO2 emissions of every purchase by consumers. Consumers also receive smart tips to reduce carbon emissions based on both their personalized lifestyle and purchase habits.

DO Black, the world’s first credit card with a carbon footprint limit from Doconomy, monitors and puts a cap on the users’ spending limit tied to the associated climate impact, effectively blocking the next transaction upon reaching the threshold.

Ant Forest platform from Ant Financial, encourages users to record their low-carbon footprint through their daily actions (taking public transport, online bill payment) and green energy points are rewarded, which after a point of accumulation, reflect in the planting of a tree.

Collaborative consciousness is all that we need in our fight to save the planet.