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25 Jan 2023

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ESG Investments Are Driving a Net-Zero Future

Article excerpt by Keith Zakheim posted with permission from ESG Impact Zone.

Full article is available from original source.

In 2020 alone, the world’s top five markets recorded ESG investments worth about $35.3 trillion, more than a third of their total assets under management. And a recent global survey of nearly 9,200 investors found that 39 percent had invested in companies with a demonstrated ESG performance.

Economics, not activism, ultimately drives results in a free market and capitalist society. The Age of Innovation was high on evangelism but low on economic returns; however, the Age of Adoption is justified by the economics as well. Nearly 3.1 million of the total energy sector jobs are in net-zero aligned industries, comprising 41 percent of total energy jobs.

Net-zero-aligned jobs are related to renewable energy, grid technologies, transmission and distribution, energy storage, nuclear energy, biofuels, energy efficiency and electric vehicles. A recent study by the Brookings Institute found that landing a clean energy job can equal an 8 percent to 19 percent income increase.

In addition, the clean energy industry is replacing the domestic blue collar jobs that were lost over the past four decades, and paying higher wages than other industries to workers whose highest level of learning is a high school diploma.

Renewables not only create plentiful and high-paying jobs, but they are the cheapest source of new power generation in nearly all markets globally, according to a 2022 S&P report. The cost of renewables continues to decline rapidly due to technological progress and government policies that catalyze new investments in renewables, which, in turn, has led to further price drops.

Critical climate technologies such as battery storage, while still somewhat expensive, continue to decline in price as demand surges and economies of scale continue to bend the cost curve.

The Industrial Revolution and its legacy of pollution, carbon emissions and fossil fuels have lasted more than two centuries with no immediate end in sight. To successfully reverse the cataclysmic impact of climate change, the Age of Adoption will have to be measured in decades, if not centuries.

The stakes are immeasurably high, and it is up to us to decide whether the Age of Adoption lives up to the promise of the past few years or becomes a mere, sad footnote in the history of our planet.

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