Addiction to fossil fuels will drive the world’s “mutually assured destruction,” while it could also hit investment portfolios, according to the CEO of a leading financial advisory and fintech organisations, echoing the words of the United Nations chief.
“Countries could become so consumed by the immediate fossil fuel supply gap that they neglect or knee-cap policies to cut fossil fuel use,” UN Secretary General Antonio Guterres said in his keynote speech to The Economist’s Sustainability Summit on Monday.
“This is madness. Addiction to fossil fuels is mutually assured destruction,” he said.
Nigel Green, founder and CEO of deVere Group, said, “the Secretary General is, of course, right. The race to replace Russian oil, gas and coal supplies could have catastrophic, irreversible consequences for the planet.”
The international scramble to fill the energy gap is putting in serious jeopardy the essential goal of capping global warming at 1.5 degrees Celsius set out in The Paris Agreement, Green said.
“It’s critical that countries around the world continue to work on their reduction of emissions in order that we have any chance of meeting the target of a 45% cut in global emissions by 2030.”
Last year, deVere joined world financial powerhouses – the two largest credit rating agencies, six major audit networks, three leading index providers, and two benchmark stock exchanges – in becoming a founding member of a new international alliance that will help accelerate the transition to a net zero financial system.
The Net Zero Financial Services Providers alliance joins the Glasgow Financial Alliance for Net Zero, the UN group for financial institutions to make credible commitments through the UN’s Race to Zero project.
The deVere CEO added that, “hitting the brakes on decarbonisation is not only a serious issue for our planet, it could also hit investors’ portfolios if they move away from sustainable investments.”
Impactful investments have been making up an increasingly large proportion of portfolios in recent years, which have gone from ‘nice to have’ to a legitimate portfolio diversification tool that delivers profits with purpose.
“This trend should not change in the wake of the current geopolitical issues. We are in extraordinary times, but these do not last forever – as financial history teaches us – and investments should remain future-focused.”
Earlier this month, Nigel Green said the case for green energy being an investment megatrend of the decade has not changed for three key reasons.
First, governments and regulators are becoming increasingly pro-ESG which boosts investor confidence.
Second, as millennials, who are statistically more likely to seek responsible investment options, become the major beneficiaries of the largest intergenerational transfer of wealth – an estimated $30 trln in the next few years – both retail and institutional investors are expected to continue to pile into ESG.
Third, the pandemic focused minds on the fact that the health of the planet directly affects human health which, in turn, affects the way we all live and work. This global mindset shift represents enormous opportunities for investors.
Green concluded: “Investors need to think carefully before rushing to reposition portfolios away from future-focused alternatives in the wake of the Russia-Ukraine situation.
“Climate change remains the greatest risk to economies and communities around the world – and there are major opportunities and high rewards for those who invest in a more sustainable future.”