How European Green Laws Have Changed the Investment World Over the Past 10 Years?

As someone who has spent over 15 years in the European Green Law field, I have to admit that the interest in sustainable technology and minimizing the impact of GHG emissions on the environment has never been bigger. From carbon insurance to electric cars — all major brands and companies see huge investment opportunities in this law and they always want to bridge the gap between the industry and environment. Therefore, the green law has changed the investment world in the past 10 years due to the long-term forecasts that predict that the companies that use sustainable production and concept would be the only ones to survive.

The impact of technology and science had led to the point where the investment is made more in alignment with the ecological conscience than in pofit, which would ultimately lead to a healthier environment. The European Green Laws, though not that young, have made a good impact on the environment so far, where the global GHG emissions have dropped by 20%, compared to 1990. Of course, the first records of the green laws trace back to the 1990s but these actually became evident a few years ago after some major countries started implementing green laws that changed the way of investing. Europe, after the European Union council meeting, declared that the goal was to become the first world’s climate-neutral continent by 2050.

To achieve this, the council announced the climate law that will be applied within the entire EU, the climate pact to engage the citizens into the action as well as target plan that depicts the detailed design of methods of decreasing GHG emissions. Though the plan has not been introduced yet, it is going to be completed by June 2021 when all the policy instruments will be applied and adopted. The key areas will be energy, environment, mobility and transport, sustainable finance as well as sustainable development. So, what does this mean to the investments and investors who invest a lot of money every year? It means one thing — turning to the investments into sustainable energy sources as well as sustainable development.

The Early Beginnings of European Green Laws

While the Green Law was not something that was taken seriously until the major companies started presenting the shocking data on global warming, mainly caused by the irresponsible handling of the by-products and waste. After some major companies pointed out this, the European Union started taking this problem seriously and that was the crossroad for updating the law and introduction of the green law. Some companies even received fines for not complying with the new green laws, which forced giants and brands to look for alternative and sustainable energy sources.

The early beginnings of the European Green Laws can date to 2008 when the UK introduced the Climate Law, which turned a lot of investments towards sustainable systems that wouldn’t do much harm to the environment. This huge step was followed by all other major European countries like Denmark, Finland, France, Sweden, Norway, the Netherlands, Germany and Spain who wanted to reduce the GGH emissions and save their environment. Instead of investing huge loads of money into the “what-they-are-used-to” industry, the investors started realizing the importance of wind, water and sun energy, which helped them to come up with new and innovative designs that offer sustainability and cheaper process of use.

The slow but steady progress of this Green Law influenced a lot of countries to start utilizing the sustainable concept in every possible way. Just for the sake of illustration that we present below this paragraph, the number of green investments started slowly increasing since 2004 and by the end of 2010, it was more than tripled! A lot of investment sources and communities wanted to change something about their work and more importantly — to save their environment and acquire more profitable but less harmful ways of production.

One of the companies that encourage recycling is Patagonia, a well-known outdoor clothing manufacturer that wanted to encourage people to avoid buying things they don’t need, including their own products. They had calculated that people throw a lot of gear each year, which largely contributes to global pollution. Instead of buying new pieces of clothing and disposing of the old ones, they invested a lot of money into the program of repair where people could turn the natural rubber or plastic bottles into parka jackets. This eco-friendly concept saved them a ton of money, but also contributed to reducing the overall pollution, which is a fantastic ROI!

As we all know, water is one of the main resources of our planet and some parts of the world don’t even have tap water. In this concept, IBM decided, even during the 1990s, to develop smart buildings that would reduce water resource management. This made IBM one of the first eco-technological brands that would introduce the green law that could contribute to the global preservation of the environment.

The Investments in the Past 10 Years

As you can see, Europe was always among the best eco-friendly concepts as it is a huge continent that is home to many well-known and recognized brands. Many brands wanted to earn their badge for being eco-aware, plus they wanted to maximize their ROIs (Return on Investment), which helped them to become the pioneers in some of the fields. For example, IKEA applied the sustainable concept into the supply chain by using 50% of wood that is taken from sustainable foresters, as well as use the cotton that comes from farms that meet Better Cotton Standards. In addition, more than 700,000 solar panels were installed into their stores for power — not to mention that they are planning to use 100% solar power for their stores!

While the sustainable energy and development were only rough drafts, the concept started slowly progressing, which led to the point where some of the major companies and brands started investing in alternative energy sources and production methods. Though a new concept, for example, Tesla cars use electricity as the main power, without using oil or gasoline. There is no gas emission at all, while the cars use replaceable lithium-ion batteries for power. In this way, the company reduces the impact on the environment while it paves the road for the electricity-powered vehicles that will eventually become the standard by 2040 in Europe.

Hewlett Packard was also one of the first companies that reported their GHG emissions, which forced them to develop detailed plans on reducing the gas emissions as they use toxic chemicals for the production of cartridges for example. In addition, they had introduced a good recycling program, which helped them to prevent any waste from ending up in the landfill. This made them invest in green technologies that would not contribute to environmental pollution.

What Can we Expect When it Comes to the European Green Laws and Investments?

As the green environment is more and more present in every country of the world, it is natural to expect that the majority of countries will start introducing new concepts on sustainable energy and production. Alternative energy is in abundance and it will never be a shortage of it. Therefore, the companies will start implanting even more concepts that would reduce GHG emissions while utilizing the high usability scale of alternative resources. This does not limit only to the real-time projects and innovations, but also to the funding and investors.

To encourage investors to invest funds into the green and alternative/sustainable energy projects, the European Union has developed Green Bonds, which are financial instruments that will be used for funding the positive environmental projects that would contribute to the global environment. This opens a door for the special investors to have a share in the projects as well as the ownerships over some assets within the projects and concepts. In addition, Green Venture Capital is the company founded in 1990 that will help all the investors to invest money into similar projects, which will help them in return to monitor all the green projects.

Carbon insurance is another asset in the green law that helps a country to insure its forests from weather-related damage. Australia is the first country that introduced such insurance and European law did adopt the same policy to increase the level of natural forest protection. In addition, it will cover fire damage made by humans as well, but also earthquakes and volcanic eruptions. Looking up to Australia, Europe is about to implement the same insurance to save the forests and regenerate them quicker after the disaster.

Due to the stricter green and eco laws, we can expect to see some of the solar implementations in Europe that would make the electricity free of cost throughout this continent. Below is the chart that explains the electricity sector investment within Europe since 2011 to 2050. We can expect to see a lot of countries to implement the green law and solar energy concept to ensure optimal and free energy flow in Europe.

I am a professional investor sharing my own thoughts and exploring ethical ways to invest. Stay tuned!



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Roman Reitman

Roman Reitman

Proficient Investor concentrated on ethical investments and green technologies.