The Art of Green Finance

What is your definition of wealth? For most, it’s not just about money. The dictionary definition of wealth refers to an abundance of money and/or possessions, but if an abundance of money and/or possessions is your aim, then you need new goals! A person who has enough money to meet their financial needs and that of their family, who can access education and access health care is already in a very fortunate position from a global perspective. If you’ve met these basic needs, you have money on the side for emergencies and you now have money to invest, then making that money work positively should be a major aim. In fact, research shows that the vast majority of people would like their money to do good as well as providing a financial return.

Lots of people who think about wealth creation do so in order to give their families a better future. However, the future of our kids looks very different to our current reality, taking into account the effects of climate change on future living conditions world-wide. Having savings can provide some security against future shocks but may not protect future generations from the worst effects of the climate crisis if we don’t dramically cut CO2 emmissions by the end of this decade. Once we have some emergency savings put aside, positively investing in climate change solutions may be one of the best things we can do for our children, our grandchildren and future generations. However, the decision to invest in this way can only be your own personal decision.

There are various estimates about how much it might cost to solve the climate crisis, ranging from 300 billion dollars to 50 trillion dollars. Either figure sounds huge, but lets take the most optimistic figure of 300 billion dollars. With almost 8 billion people in the world, that is only around 40 dollars per person! Or putting it in other contexts, it’s about the same amount as the UK government spent on Covid measures up until 2021, the same amount as the world’s military spending in 60 days and less than the total charitable giving from the USA per annum. In fact, less than 2% of global giving goes towards environmental giving.

UK total wealth is almost 12 trillion. 1% of that wealth is 120 billion; more than a third of the amount needed using the optimistic scenario. So where to start? If you have money to invest, how about starting with 1% for the planet.

Bad climate news can feel overwhelming and making small daily changes can feel pointless in the face of this. Supporting organisations working on the climate crisis can feel really positive. If you are in a good financial situation then investing in green solutions may be one of the best ways you have of countering climate doom. However, bear in mind, no investments are risk free and you could lose the money that you invest. Therefore, only invest what you can afford to lose and make sure you have a solid financial basis before taking this step.