Geopolitical uncertainties and the constant threat of instability in eastern Europe has created doubts about oil and gas supplies and the dismal prospect of a severe energy crisis. Although, there has been a strong pitch for increased focus on clean technology and the renewable energy as a means to preserve the environment, no serious efforts have been made to move away from conventional sources of energy. Among other things, a major constraint in exploiting renewable sources and nuclear power, finance may well be the serious bottleneck. This is because the return on investment is low, and the gestation period is fairly long. Moreover, the emphasis on value investing and the new found enthusiasm on fintech have resulted in heavy capital flows into these avenues, leaving little for green energy. However, the rude wake up call came after the Russia – Ukraine tensions and the threat of supply disruptions and steep price increase in oil and gas because of the Russian control over resources in Europe.
The time has now come to seriously focus on establishing an ecosystem that would essentially rely on biofuel and other forms of energy such as solar and wind. Since, clean technology is associated with safety hazards, it may take some more time to press for nuclear technology. In addition, the fears about misuse of this technology for weaponizing and concerns about such weapons falling in wrong hands may also act as in wrong hands may also act as a deterrent till there is a global consensus on restraints, checks and balances.
“Even the decision to invest in one place rather than another… is always a moral and cultural choice”, Pope John Paul II, Centesimus Annus, N.36.
Taking this further, one can reasonably conclude that even the decision to invest in one business rather than the other is a simple matter of social responsibility. The tight rope walk to balance economic growth, environmental safety and the interest of future generation is nothing but focussed efforts towards sustainability. Since, heavy capital expenditure is pre- requisite for implementing this forward-looking programs, the government, corporate business houses and even individuals should play a critical role in mobilising and channelising savings and investments into these avenues.
As a first step, investment in green funds, deposits and bonds should be made more attractive by offering higher returns in comparison to other forms of investment. For instance, tax saving infrastructure funds by banks should offer atleast 50 basis points more than normal deposits and corporate bonds. In additions, the current 2% contribution to CSR projects should be increased to 3% with additional 1% solely earmarked for green energy. The government in India can consider 1% cess on corporate profits over 200 crores and use this exclusively to guarantee long term green bonds backed by government. Above all, individual investors, should also earmark 1% of their savings for investment in financing green energy projects through banks that have proven record of sustainability. Even the desire to initiate a change may go a long way in bringing it about, if it is articulated with conviction and in the most convincing manner.
Associate Professor & Program Director – UG
Alliance School of Business