ENHANCING BUSINESS AND INVESTOR DECISION-MAKING
ENHANCING BUSINESS AND INVESTOR DECISION-MAKING
Environmental Productivity™ analysis incorporates assessing the efficiency with which companies use and impact any natural resource that can be quantitatively measured (to allow for both trend and comparability analysis over time). The most commonly available data are about energy production and use (Carbon/GHG emissions), water use, and raw materials consumption (waste streams). Natural resources such as soil, forests, and agriculture are also of interest to Terra Alpha, but data are much less available at this time.
We work to demonstrate that environmentally productive business practices enhance returns for businesses and for long-term oriented investors. We use Environmental Productivity™ measures as part of Terra Alpha’s investment process. We believe that companies that fail to understand our changing environment and societies are at risk, and those that recognize and adapt to these challenges can capitalize on them.
The world faces a complex array of natural resource challenges. Growing global populations and related economic growth are driving higher levels of resource demand and consumption. The world has reached record levels of carbon emissions in our atmosphere, is seeing increased strain on and competition for freshwater and key raw materials, as well as greater magnitudes of waste streams.
By 2050, the world’s population is expected to be 3x what it was in 1960 and to be using 3x the natural resources that the earth can replenish, each year. Even by 2020, human demand will exceed our earth’s regenerative capacity by 75% (1).
Our current rates of consumption and impact on our finite natural resources cannot continue indefinitely. At Terra Alpha, we envision a world where greater efficiency in natural resource use by our economy will allow for sustainable global prosperity. This vision requires deliberate awareness of the risks and opportunities for business leaders and investors.
Terra Alpha developed Environmental Productivity™ as a proprietary analytical framework to gauge how effectively companies are navigating in a world marked by natural resource constraints. Environmental Productivity™ analysis allows for the incorporation of the cost of nature into business and investment decision-making.
In a resource-constrained world, Environmental Productivity™ (EP) analysis is an essential tool all business leaders and investors should include in their decision-making tool box to enhance returns. This report offers both businesses and investors an outline for how to consider Environmental Productivity™ in their decision making and provides resources for both parties to take next steps.
The world has entered an era of unprecedented energy demand and production. Companies that diversify their energy sources, improve efficiency, and reduce emissions will be better positioned to provide long-term investment returns in a future replete with shifting energy sources, fluctuating prices, uncertain regulatory environments, and political and economic instability.
Greenhouse gas emissions, primarily from the use of fossil fuels, are embedded into the very fabric of our economy. The impacts of these emissions pose real threats to our society and our global economy. This report offers both businesses and investors an outline for how to consider greenhouse gas emissions in their decision making and provides resources for both parties to take next steps.
Limited or no access to water - what was once a distant concept to businesses - has now become reality for many and a near-term challenge globally. Global water resources are becoming increasingly stressed, and the impacts of this stress reach across all sectors. Competition for water can disrupt operations, damage reputation, and constrain growth. Companies that proactively assess the exposure of both their direct operations and global supply chain to water-associated risks will have a competitive advantage over their peers and be more successful in the long term.
Terra Alpha operates on the premise that Environmental Productivity™ (the efficiency by which companies use and impact natural resources) will enhance business and investors risk-adjusted return. This report focuses on the business case for sustainable water management. It highlights the risks, opportunities, and resources available for businesses and investors to measure and manage them.
See our report: Navigating Rough Waters
Material extraction and waste generation are both increasing as global consumption grows. The idea of production with the end use, impact, and any residual in mind - a “circular economy” - can increase resource availability for production and create value throughout a company’s operations. Companies that can reduce material extraction, achieve little to no waste during processing, and recycle, reuse, or resell what is leftover, will realize considerable positive returns and limit their exposure to resource scarcity in the future.
Companies that strategically optimize resource efficiency and recover maximum value from waste streams will be best positioned to outperform in an increasingly resource-constrained world. This report offers an investor case for considering corporate materials and waste factors in the investment process, and provides resources for businesses and investors to take the next steps.
See our report on waste: Investing in a Resource-Constrained World
Footnote: (1) WWF, ZSL, Stockholm Resilience Centre, Global Footprint Network, Stockholm Environmental Institute (2016). Living Planet Report 2016 Risk and resilience in a new era. WWF International.
Charts: (1) US Census Bureau, International Data Base, June 2010 update. (2) http://www.21stcentech.com/human-population-update-carrying-capacity-planet-earth/ (3) https://cdn.friendsoftheearth.uk/sites/default/files/downloads/overconsumption.pdf