The UK is off course to meet its target of net zero carbon emissions by 2050, but there is still an opportunity to improve those prospects.
According to the Institute for Public Policy Research (IPPR), the UK government has not yet delivered the scale of investment needed to ensure a low-carbon future.
On the eve of what would have been the start of the United Nations Climate Change Conference (COP26) in Glasgow, the progressive think tank is calling on the government to lead by example on the world stage by taking ambitious action.
The government’s upcoming 10-point plan to bring down emissions could set precedent for other nations, the IPPR said.
A new analysis shows that over the course of this parliament the government has committed to investing just 12% of what is needed to meet their net zero emissions target.
The think tank estimates that £33bn (£43.4bn) a year in additional annual investment is needed to meet the net zero target, but only around £4bn annually has so far been committed.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="READ MORE: BP CEO says net zero plan ‘not charity’” data-reactid=”29″>READ MORE: BP CEO says net zero plan ‘not charity’
The green homes grant, investment in cycling, walking infrastructure and in offshore wind announced earlier this year show the government is moving in the right policy direction, but action at a greater scale and pace is needed, according to IPPR.
Other measures that should be on the agenda to cut emissions are decarbonising homes and buildings and investment in low carbon transport. The IPPR calculates that an additional £10.3bn is needed a year to improve public transport services and efficiency, as well as boosting cycling and walking, while four times the current annual spend would bring decarbonising homes in line with targets.
Job creation schemes also have potential for an injection of green cash. The think tank has previously calculated that 1.6 million jobs could be created up to 2030 through green investment.
Carsten Jung, IPPR senior economist, said: “The pandemic will leave the UK economy weaker and unemployment starkly higher. But, with forward-looking policies, the country can bounce back in the new year. Making future-proof investments that tackle the climate crisis can boost business, generate jobs and provide people with income security.”
Among the green jobs opportunities could be: Work improving the carbon footprint of homes and buildings; nature restoration; transport and infrastructure; and work to make industry greener.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Watch: The government’s £2bn Green Homes Grant scheme explained” data-reactid=”35″>Watch: The government’s £2bn Green Homes Grant scheme explained
The IPPR report also emphasises the importance of ensuring the transition to a net zero economy is done fairly. The think tank has previously proposed a Just Transition Fund amongst other measures to support communities negatively disrupted by the changes.
The greatest growth in green jobs is expected to be in the North West, the East Midlands and Yorkshire and the Humber. IPPR also notes that investment in low emission housing would have a high impact on job creation in the North West and the South East (outside London).
Luke Murphy, IPPR associate director, said: “As the host of COP26 in 2021, the UK can use its domestic policy ambition to help inspire the rest of world and leverage greater ambition and action from other developed countries.
“As the fifth-largest contributor to cumulative global greenhouse gas emissions and given its unsustainable global environmental footprint, the UK also has a responsibility to take bolder action.”
Drugmaker Merck divests investment in Moderna – TheChronicleHerald.ca
(Reuters) – U.S. drugmaker Merck & Co said on Wednesday it has sold its equity investment in Moderna Inc, after benefiting from a surge in the stock price of the vaccine developer this year.
Merck did not disclose the details of the sale proceeds, but said it expects to record a small gain from the sale in the fourth quarter of 2020. (https://bit.ly/3og5kil)
Moderna’s shares have risen more than seven-fold this year, valuing the company at $55.80 billion as of Tuesday’s closing price.
Moderna is one of the front-runners in the race to develop a coronavirus vaccine, and on Monday filed for U.S. emergency use authorization of its vaccine.
Merck, which had invested $50 million in Moderna in 2015, said it would retain exposure to the company indirectly through its investment in venture funds.
(Reporting by Manas Mishra in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)
Amid slump, BMO exiting energy investment banking outside of Canada – The Globe and Mail
Bank of Montreal is reshaping its investment and corporate banking division in a major way by winding down its energy sector coverage outside of its home market.
Going forward the bank’s investment dealer, BMO Nesbitt Burns, will devote its energy sector resources to the Canadian market, employees were told Monday. The move is expected to affect the bank’s long-standing Houston office, and the news comes amid a prolonged slump in the energy sector – particularly for U.S. shale producers.
“We’re allocating our resources to businesses where we are well-positioned from a market share position and to deliver strong returns now and in the future,” BMO said in a statement to the Globe. “As part of these efforts, we’ve made the financial decision for an orderly wind-down of our non-Canadian investment and corporate banking energy business.”
The bank’s energy business, which includes investment banking and corporate lending, will now focus on the Canadian market where BMO said its “competitive positioning is strongest, our financial opportunity is most attractive, and we have a deep and long-standing commitment to supporting clients.”
BMO has a rich history in Houston, having opened its doors there in the early 1960s. Former chief executive Bill Downe, who retired in 2017, spent his early days as a credit analyst and corporate lender in the energy-focused Houston office.
The bank’s American energy business has been known for its acquisitions and divestitures arm, which focused on trading land assets. BMO has also advised on large U.S. deals, including serving as Spectra Energy Corp.’s financial adviser on its $37-billion sale to Enbridge in 2016.
But in recent years the outlook for U.S. energy has shifted dramatically, as the boom supported by shale oil and gas flamed out. Many producers created a bubble by overpaying for shale assets, often with a lot of debt, only to find out many of the wells are not as prolific as once hoped.
At the same time, the outlook for energy prices has taken a hit. Not only has the pandemic altered energy demand, but there has also been an oversupply of oil, which is expected to suppress prices for the near future.
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There is no alternative to staying invested – The Globe and Mail
The current investment landscape is not an easy one to navigate. Technology stocks are trading at record highs; value stocks have been underperforming for years, although they have recently shown signs of life; bond rates are close to zero; and holding cash is a money-loser once inflation is taken into account. So, what are financial advisors and investors to do?
While the current investment environment is very challenging, the biggest risk that most investors with a long-term horizon face is not losing money, but not having enough of it. That’s why there’s no alternative to staying invested in a well-diversified portfolio.
Although there’s no magic formula, there are some prudent steps that can be taken to get through these challenging times. Here are three simple and proven investment strategies to consider:
1. Avoid extremes
There’s a growing group of investors who think they should concentrate their portfolios on a few big technology stocks – especially because of their strong performance during the COVID-19 crisis. That’s because the dopamine hit investors get when they make a correct bet on the market direction is often very stimulating.
That effect becomes difficult for investors to control and, as long as it’s working, they’re encouraged to take on more and more extreme bets on the market’s direction. They will consider it a better strategy than diversification.
The problem with this approach is that no stock or sector outperforms the market all the time. One day, something else will replace the performance generated by the big technology stocks – and nobody knows what that will be.
That’s why good advisors preach diversification even if it makes many investors feel remorseful in the short term. These advisors will also remind investors that diversification means getting the good, missing out on the extraordinary, but preventing the tragic.
For investors who are adamant on making such bets, advisors can suggest that they set up a “fun portfolio” in which they can place a smaller amount of money in a self-directed account. That will allow them to attempt to time the market without putting all of their assets at risk.
It’s an easy way for investors to fulfill that urge while ensuring most of their assets remain in well-diversified portfolios.
2. Prevent the default to cash
Faced with one of the most challenging investment environments in decades, some investors will shy away from investing altogether and default to cash. Although a global pandemic and growing geopolitical tension are two very good reasons to stay on the sidelines right now, there’s a big risk in doing so.
Holding too much cash in a portfolio leads to a vicious cycle. When the market goes up, investors tell themselves they’ll wait for the next correction; then, when the market goes down, they’ll say that they’ll wait for it to drop further. As such, investors who succumbed to a “cash addiction” in 2000, 2008, or even this past March paid a heavy price. Of course, it’s easy to look back at these dates in hindsight and say that investing during these periods was a no-brainer, but that’s never the case.
Finally, the accompanying table shows the lousy returns cash has provided to investors during the past 10 years. It’s very difficult for investors to reach their life goals if they get a negative real rate of return 10 years in a row. That’s why advisors help fight the addiction to cash among some investors by focusing on their financial plans, making sure they stay invested, and by helping them manage the inevitable cycles of fear and greed.
3. Focus on preparation more than predictions
Predictions are about trying to forecast the future while preparation is about setting the right expectations for whatever may hold. Investing has a lot more to do with preparation as it’s very difficult to foresee what will happen in the future correctly.
Good advisors can help investors prepare by performing a “pre-mortem” of their investment portfolios to know what could go wrong and how they should react if those scenarios were to happen. For example, advisors can help investors prepare for a situation in which tech stocks could fall by 25 per cent in a short time – and whether they should buy more shares or liquidate their positions.
Preparing for these situations ahead of time allows investors to follow a process instead of their emotions when these events happen. That leads to better results in the long term.
Jonathan Durocher is president of National Bank Financial Wealth Management.
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