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Investing Sustainably

Our Transport Revolution Blog this year covered the unfolding transport revolution – a subset of the larger Sustainability Revolution, which is a progression from the Agricultural, Industrial and the Digital Revolutions. As we learn to harmonise better with nature, this sustainability focus will change the way our food, energy and water industries operate – a change triggered by overpopulation of our planet that we can hopefully overcome eventually.

We can’t endlessly exploit our planet’s finite resources, so sustainability is critical and will significantly impact our global economy. How do investors prosper in this while using their savings for ethically farsighted outcomes? Major change usually occurs as we reach economic tipping points. People want to be ethical and began adapting as solar panels became financially compelling – batteries are on a similar path. The same will occur for electric or fuel cell cars as their costs start to converge with traditional vehicles.

In that context, we may find that like the video era – fuel cell vehicles might prove to be the ‘Betamax’vs the ‘VHS’ of electric vehicles (Betamax was smarter technology that lost to VHS in the videotape wars). VHS was cheaper but not as good and fuel cells may be better but aren’t quite ready yet.  Regardless, like the exponential computing power improvements, battery costs have also been falling.

The sustainability transition is picking up speed as we accept the need for improved stewardship of our planet. As it gathers speed, comprehensive change will dramatically affect most aspects of our daily lives. This sustainability focus encompasses clean energy, energy efficiency, industrial efficiency, waste and pollution technology, advanced materials and manufacturing technology. So, let’s flesh this out a bit…

No waste

Economic restructuring needs to discourage any waste as well as equitable distribution of resources. It involves a core appreciation about harmonising with nature to encompass the perspective of our younger folk, while doing so profitably for a socially rewarding outcome. Nature recycles waste as a treasured resource by others in the food chain. Our western world waste is often as much as 90% of raw inputs, making it a cost that needs to be productively used in some way.  Australia’s ‘Vegemite’ is a good example – developed in 1919 from brewery waste when supplies of British ‘Marmite’ were disrupted.  (Expats crave their Vegemite, packing it lovingly while northern hemisphere friends look on, bewildered!)

Commercial returns are the fastest way to get support behind sustainability and many find being green produces green (profit that is). For best effect, tax, accounting and finance tools need to be adapted to more accurately reflect real costs. This should clarify the enormous hidden subsidies in our economy, often Government ones. When we pay the true cost of resources, good economic and environmental choices begin to align. Farsighted government incentives can help us be truly conservative, while investing sustainably.

For example in the US, Walmart is generating significant new revenue with its goals to:

  1. be supplied 100% by renewable energy
  2. create zero waste and to;
  3. sell products that sustain people and the environment.

Robotics

The robot revolution will change the way we’ve thought about technology generally and robots in particular. They can positively influence society, improving our productivity and overall fortunes. As human jobs change to accommodate them, rather than creating high unemployment we may just accomplish more.  However the nature of jobs will change, so displaced workers must become adaptable.

The extensive range of robotics are utilised in two main ways:

  1. As a Robot – where it can perform complex tasks by itself
  2. As a Cobot – operated by people teaming with robots, often in a robotic manufacturing production line to improve factory efficiency.

Cobots

These are robots that closely cooperate with humans. Manufacturing cobotics in emerging applications is growing very fast and in western countries they’re competitive with cheap but rising Chinese labour costs.

Automation is already improving healthcare outcomes, including in mobile diagnostics. In surgical work they are used remotely by a medical operator for high quality, consistent surgical rates where post-surgical complications are being halved. An emerging application is in miniaturised form where very small tools and a camera can be passed down your windpipe for non-invasive vascular surgery.

Dark warehouse

There are no humans, so lights aren’t needed. Consider logistics robotics where on-line retailers like Amazon need highly automated, efficient warehousing systems. Emerging automated logistics systems use a 3 dimensional robotic grid. There, a small warehouse robot ‘truck’ runs on little rails up/down/sideways around a 3D grid of ‘bins’ picking up any warehouse items that are needed. This development is on the way towards the ‘dark warehouse’ where no people are needed, so no lights are required. Delivery robots and drones are also starting to emerge.

Lawn mowing robots

Another area to invest in that is growing well is consumer robots – robotic vacuum cleaners like iRobot are getting better and selling well. They can use iPhones for remote control and even take themselves back to their recharge station as their power runs down. Some similar applications being researched are; a robotic lawn mower, loading and unloading dishwasher, laundry folding, etc.

Investing for sustainability

There are many opportunities to invest in robotics and other sustainability industries but unfortunately few of these are in Australia. Even so, it is becoming accepted that doing the right thing ecologically or ethically can also improve profits and reduce risk while also building a commercial brand. That said, enterprises focused on sustainability (or ethical grounds) are commendable but not all profitable investments. We’ve been researching investments that more profitably tackle the sustainability area, so please discuss this with us if it interests you. Meanwhile, don’t forget all this is happening amid the Asian century.

If you would like to discuss the information in this article or your investment options with one of our wealth management professionals, get in touch today!

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Disclaimer: All information in this article is intended to be general in nature for discussion purposes only. So you should not rely on it and seek personalised professional advice before making any decision.