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This week, the New Zealand government and U.S.-based investment group BlackRock announced a NZ$2 billion ($1.2 billion) fund, called the New Zealand Net Zero Fund, to provide access to greater pools of capital for New Zealand businesses to accelerate their investment in green energy such as solar, wind, green hydrogen and battery storage.
It is a large fund, but it represents a small percentage of the total $9.1 trillion in assets under management at BlackRock.
“This is a first-of-its-kind fund in the country that demonstrates the huge economic potential of New Zealand being a climate leader,” Prime Minister Chris Hipkins said Tuesday in Auckland. “This fund is a massive opportunity for New Zealand innovators to develop and grow companies.”
The fund will accelerate zero emissions in New Zealand, which in turn will become a significant selling point for the country’s business as consumers continue to demand more sustainable products and services.
So why is it that a country as small as New Zealand can invest close to 1% of its GDP (around $250 billion in GDP) in sustainability when a country like the U.S. has no such fund at all, yet, the U.S. has the largest number of emissions and talks the most about Environmental, social, and governance (ESG)?
Larry Fink, BlackRock CEO, even went as far as dropping the term “ESG” as it has such a political backlash especially when it comes to investment.
The U.S. is looking at introducing new rules with regards to reporting on Scope 1, 2 and 3 emissions as an U.S. Securities and Exchange Commission proposal and while California is facing tight deadlines when it comes to zero-carbon emissions. Yet the investments in infrastructure and the funds available for companies to achieve this “zero-carbon” goal are lagging.
So how can we go from the current situation in which only few companies understand their emissions to zero carbon? It is a Herculean effort that needs to start with emissions reporting.
That will provide insights in how well a company performs from a sustainability perspective and getting an understanding of how to quickly make improvements.
Electrification is not the short-term answer for transportation, but companies can choose carriers that have a lower carbon footprint or trucking companies that have started investing in carbon capture technologies.
The main recommendation is that companies need to start acting now. Having an ESG strategy is not enough. Carbon emissions will not be reduced by having great plans, only by putting actions in motions that help even if it is a small reduction. Multiply that times the millions of fleets and we are talking millions of metric tons that will be cut from the 3 billion-plus metric tons transportation is responsible for.
Besides BlackRock, other investor companies like Generation IM have focused on investing in companies with sustainable technologies such as project44, o9 Solutions and Convoy. So start talking to your technology partners to understand how they can help you in this joint global industry effort to improve sustainability.
About the author
Bart De Muynck is an industry thought leader with over 30 years of supply chain and logistics experience. He has worked for major international companies, including EY, GE Capital, Penske Logistics and PepsiCo, as well as several tech companies. He also spent eight years as a vice president of research at Gartner and, most recently, served as chief industry officer at project44. He is a member of the Forbes Technology Council and CSCMP’s Executive Inner Circle.
