Transitioning to a Sustainable Future

Helix.Earth has been saying that implementation of sustainable practices that help you transition to a lower carbon business model, is profitable, and your company will be more competitive in the sector. But don't take my word for it.

Here is how we have proved our hypothesis:

We assembled a portfolio of listed equities, comprising of companies in essential hard-to-abate sectors, such as energy, cement, steel, heavy industry, agriculture, transport, airlines, logistics, and shipping.

We analysed their financials in relation to when specific sustainability initiatives, were implemented, as per the public disclosures.

We also looked at stock prices , when the initiative had been implemented. We went 'long' when the company implemented a 'good' practice such as lowering emission, waste treatment, circular economy, renewables etc. But we went 'short' when the company made 'bad' moves, such as uncertainty about scope 3 emissions, additional fossil fuel project etc. We kicked out companies that implemented 3 'bad' moves within a year, and we added companies that made 3 or more 'good' moves year on year.

TBH, our portfolio does have oil and gas companies, but that is because our lives depend on it. But we go long and short depending on how they make 'good' or 'bad' moves.

We backtested the portfolio with this approach back to 2010, when companies first started talking solar.

The proof is in the pudding....

Companies that implement sustainable practices have better financial returns than the benchmark.

But by how much?

7-9% Alpha. That's the financial benefit of consistently implementing sustainable practices. The gap starts widening when they increase their market share, and access markets which were dominated by larger players. Our portfolio started seeing the benefits from about 2017, and the gap has been widening (on non-correlated basis). It stands at 9% above the benchmarks as of now.

This is not a one-off instance, or driven by a specific policy, or a specific individual.

While the mainstream media wants you to believe the following:

1. The technologies that are necessary for reducing emissions are not yet available, or not at scale.
2. It is often costly to implement sustainable practices.
3. Sustainable practices take too long to implement, and even longer to show results
4. Individual actions are not scaling up at the right pace, so you are the problem. You are using fossil fuel, so we will continue to produce.
5. The right policy environment does not exist.
6. Finance has not scaled enough to be able to invest in these practices.
7. Carbon credits are the only option. There are no other options available.

Your choice is

Follow the mainstream media and sit tight.

OR

Follow the path to a Sustainable Future

Here are 3 ways you can engage and set your own course:

1. My book gets published on May 1st. But you can pre-order it here.
2. I developed this model by learning the principles of regeneration, from the Capital Institute . They have a webinar on Monday for you to gain a background on this. Here is the link to my post which gives you the details.
3. I run a weekly free 'Lunch and Learn' session every Tuesday at 12 noon UK time. No need to register, just use this link to join the session. To help you get the most value, just copy the link and add it to an entry on your calendar, so that you get a reminder, and can block the time to learn. If you want to be there, but you have a conflict, all our sessions are recorded and is available for you to watch.

Have a great weekend, and Happy Transforming!!!!