Category

Sustainable Growth

Growing Better by Being Smarter… Sustainability and Economic Growth go Hand in Hand

By Climate Change, COVID-19, Eco Hotels, Economic Growth, Environmental Policy, News, Sustainable Growth

According to NASA figures (and who’s going to argue with them), we’ve just lived through the hottest September ever: wildfires raged in California, the Amazon Rainforest is still on fire (as it has been since August 2019) and Donald Trump was driven to muse about new “Forest Cities”.

The United Kingdom recorded its wettest September day ever, with a single day’s deluge producing enough rain to fill Loch Ness. And over the last twenty-five years, the Great Barrier Reef has more than halved in size, having been around (undiminished) for more than 500,000 years before that. Every successive decade since 1980 has been hotter than the last, and the previous five years have been the hottest ever.

Only the most swivel-eyed, gimlet lipped climate change denier; only Forest City fantasists of the most extreme kind, could fail to see the signals. Our precious planet is in trouble…

Which is precisely why most countries around the world (except for those currently led by swivel-eyed fantasists) are now committed to ambitious climate mitigation programmes of various stripes and colours: and even in the United States, Joe Biden’s Democrats are committed (if elected) to deliver their Plan for Climate Change which will cost something in the order of $ 2 Trillion. The European Green Deal has been costed at $180 Billion, and China’s National Strategy for Climate Change Adaptation is expected to cost a nose bleed inducing $6.6 trillion: all of those figures daunting, but doing nothing isn’t exactly an option (see above).

So where’s all this money supposed to be coming from? Most economies across the globe are still struggling to come to terms with the impact of COVID-19, and we aren’t exactly living through a period of sustainable economic growth.

Added to which most climate mitigation programmes slow down traditional growth vectors, especially so in economies with a high dependence on fossil fuels (like China), those undergoing rapid economic expansion (like India) and those experiencing exponential population growth (India and China).

So how can effective mitigation actually be delivered in an employment and growth-friendly way, protecting key economies and ensuring, perhaps above all else, that the world’s poor aren’t left behind in the process? How can a policy with a built-in tendency to slow down an economy also create the growth it needs to move forward? As Hamlet might have said (in an expanded script) that’s a very interesting question…

And it turns out there’s an equally interesting answer.

The IMF this month produced a blueprint for sustainable economic growth of precisely the kind required, dauntingly titled “A Long and Difficult Ascent” and structured around the central thesis that climate mitigation strategies can also foster growth, even in those vulnerable economies with high levels of fossil fuel dependency and fast-expanding populations. It can do it through a twin-track strategy of creating “an 80% subsidy rate for renewables production” and then combining it with a ten-year public investment programme, which the IMF calls a “Green Investment Push”. And not only is that a much more jaunty tagline than the puritan sounding “long and difficult ascent”, but it is substantially based on policies that have (to a greater lesser extent) already been tried and tested. Analysts predict that in conjunction with a programme of steadily increasing carbon prices (which has also been tried before), the “Push” can increase growth rates annually globe by 0.7% over the next fifteen years and decrease carbon emissions to zero by 2050.

And that 0.7% may not sound a lot, but based on Global GDP last year it amounts to $994,000,000,000 every year for the next fifteen years, or $14.9 Trillion in all: more than seven times the amount needed to pay for Joe Biden’s Climate Mitigation Plan and enough to make the European Green Deal look like a pocket money project. And that, in a nutshell, is how climate change can be addressed, mitigated and paid for in our rapidly changing world.

With the typical understatement of a bureaucrat wearing hush puppies and checking for typos, the IMF’s Chief Economist predicted The Green Investment Push would put the global economy “on a stronger and more sustainable footing over the near term”.

You can say that again…it certainly beats watching more forests blaze into flames live on Fox News, and Loch Ness brimming over with rain. It just takes a little ambition and pluck (as Hamlet might also have said).

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital through innovative programmes like the Project.

Find out more about Eco Hotels

ECO HOTELS

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid-market hotel brand, offering “green hospitality” as part of a progressive roll out across India which intended to take full advantage of current market opportunities on the subcontinent.

Executive Overview

We desperately need to square the circle and reconcile economic growth with sustainable, planet friendly programmes; and to my mind the newly unveiled IMF Green Investment Push is capable of doing just that. 

It’s certainly a programme we as Red Ribbon can happily buy into, having placed Planet, People and Profit at the very heart of our vision since the company was founded more than a decade ago.

red ribbon invest

What’s Growth got to do with it…as it happens plenty, and Indian Infrastructure is a key driver for Housing Policy

By Affordable Housing, Construction Technologies, COVID-19, Housing policy, Real Estate Markets, Sustainable Growth

Keynes wondered about kick starting an economy, paying people to bury bottles with £10 notes in them, and then paying others to dig them up and spend the cash. Of course, the great man’s tongue was probably firmly in his cheek, but he was making a serious point: modern economies are driven by expansionary policies. That’s what lies at the heart of quantitive easing strategies. But it’s much better to spend those £10 notes on roads that don’t go nowhere, which is why infrastructure policy is so important. And there’s no better example of that at the moment than India, which has seen unprecedented infrastructure spending over the last decade and COVID has done little to slow it down.

This month alone Indian Railways launched 22 new local and 18 main line services in Mumbai (on 10 October); on 12 October the 11 km rail tunnel connecting Howrah to Salt Lake (via Kolkata) was completed (part of a 17 km system including 6km of elevated sections), and the Union Ministry of Road Transport announced 2,921 km of new highways had been completed as part of the Bharatmala Pariyojana Project. All of which are having a knock on effect on expansion across key areas of the Indian economy, including housing and construction, which are growing like never before. Those roads certainly aren’t going nowhere…

Since 24 September The BSE Sensex Index (which tracks stock on the Bombay Exchange), has rallied by nearly 11%: its strongest performance since June, the best of any equity benchmark anywhere in the world. And it’s now within 2% of wiping out its entire losses for the year to date: given the economic shocks of COVID 19, that’s no mean feat. 

Sameer Kaira (of influential, Mumbai based Target Investing) has predicted a third quarter bounce in GDP on the subcontinent, with Sensex likely to hit a record high by December. With a Delphic sense of understatement, Kaira highlighted a key factor as “various steps taken by policy makers”. But what does he mean by that?

Well, for a start Prime Minister Modi’s Government is set to relax COVID restrictions further, allowing schools and entertainment complexes to re-open from October 15, and also loosen restrictions on large gatherings: so that’s certainly one important step from a policy maker. But more expansive policymaking hasn’t gone away either. The Reserve Bank’s Monetary Policy Committee has announced further steps to increase liquidity: leaving the repo rate (the rate at which it lends to other banks) unchanged at 4% and promising to maintain its “accommodation stance” well into the next fiscal year. The Governor of the Bank also announced another round of quantitative easing as part of its Operation Twist initiative, much to the delight of financial markets and external investors (10 year Bond yields fell to 5.9%).

All of which is fuelling the infrastructure boom.

And because all those roads, trains and tunnels aren’t going nowhere, its also giving added impetus to India’s Real Estate Markets: primed to meet the needs of the fastest growing population on the planet and spurred on by the Government’s Affordable Housing Programme. Better infrastructure suddenly makes building projects across the country a much more attractive proposition. 

It’s certainly better than burying cash in a bottle…

Modulex Construction is the World’s largest Steel Modular Building Company. It was established by Red Ribbon to harness the full potential of fast evolving technologies and deliver at pace to meet the subcontinent’s evolving needs.

Find out more about Modulex

This image has an empty alt attribute; its file name is Modulex-Logo-300x77.jpg

Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

Modulex is setting up the world’s largest steel modular buildings factory in India.

Executive Overview

With a further easing of lockdowns underway, the subcontinent’s financial markets are starting to move forward: faster than other equity markets across the world. And that has a lot to do with the Central Bank’s Operation Twist Programme, which is fuelling growth across the country.

No surprise then that the impact of these emerging trends will be first felt in Infrastructure policy, something I’m sure will act as a key driver for the rest of the economy.

modular

Closing the Loop…It’s all About Time and Modular Construction is part of the process

By Climate Change, Eco Hotels, Environmental Policy, Mainstream Impact Investment, Sustainable Growth

You wouldn’t buy a new book, take it home and throw it straight on the fire: well you might if it was “The Art of The Deal”, but let’s agree to make this is a Trump free zone for a moment. And it really is all about time, because that book you bought will eventually end up in a fire, adding to a landfill or being recycled. It’s just a question of when it happens, but where it happens couldn’t be more important at the moment. Burning it as waste poisons the air, burying it pollutes the earth but recycling will bring it back as something else (perhaps, who knows, another book). That’s what we mean by the Circular Economy: creating sustainable growth by using our finite resources to bring resources back. It’s all about closing the loop and thinking ahead…and it’s all about time.

Now more than ever there is a compelling need for waste and pollution to be designed out of our economic activities, preserving scarce resources in an effort to protect our environment.

And that applies in particular to the Construction Sector: more than a third of landfill waste can be sourced to building and demolition projects, with an average new build producing 1.8 kg of unrecycled waste for every square foot of floor space created. A 50,000 square foot office block will produce an average 100 tonnes of waste during construction, only 20% of which is recycled. And another 4,000 tonnes when it is demolished: steel, glass and wood that could ordinarily be recycled is impossible to recover because of cross contamination with other (non recyclable) waste products: so it all goes to landfill. It is appallingly wasteful and given the life expectancy of that office block is 50 years, waste on such a scale couldn’t be more significant for the life of our planet.

Modular Construction closes the loop on such a destructive cycle: individual components are manufactured indoors in controlled conditions, so the quality of the build is higher and waste levels inherently lower. Cyclical production to standard models also means materials left over after one project aren’t discarded at all, but used on the next development. Site assembly is three times faster than conventional methods because modular units are 80% complete when they get to site, meaning there’s less time for waste to build up. And taking all those factors together, that adds up to 90% less waste on site with modular than its conventional alternatives: no broken bricks, shredded plasterboard and rusting steel left behind, waiting to be carted off for burial in a landfill.

Because the final assembly on site is so much quicker, modular construction also creates less site traffic over a much shorter period (70% less in fact): and that means less diesel fumes polluting our air and less energy consumed in delivering the finished building.

And that’s not all: when a modular building comes to the end of its useful life, the individual components can be reused or recycled. There is no cross contamination with other non-recyclable materials, because for all practical purposes there is no demolition at all… no need to hammer the building down brick by brick because, module by module, it can be moved to a new location and re-assembled or individual modules re-used elsewhere.

Find out more about Modulex

This image has an empty alt attribute; its file name is Modulex-Logo-300x77.jpg

Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

Modulex is setting up the world’s largest steel modular buildings factory in India.

Executive Overview

Global Housing needs have been driving an unprecedented move towards Modular Construction technologies, because they offer an opportunity to deliver at the speed, cost and quality required. But that’s only half the story…

Modular Construction is also more energy efficient and better aligned to the closed loop production methods that are proving so important for the preservation of limited resources. That’s why it will be so important for all our futures.

sunset

Hard to See it, When You’re in it…COVID might obscure the future, but it will also speed it up: The Lessons for Indian Real Estate

By Climate Change, Eco Hotels, Environmental Policy, Mainstream Impact Investment, Sustainable Growth

Guy de Maupassant was a straight talker: the French novelist used to eat lunch every day in the restaurant at the Eiffel Tower, because it was the only place in Paris he couldn’t see the Eiffel Tower from: he couldn’t see it because he was in it. And that’s pretty much where we are at the moment with COVID: looking out from the dark tunnel of the pandemic, it can sometimes be hard to see where all this is going. History, though, has some pointers for us. In 1919 San Francisco had a powerful Anti Face Mask League: mobilising public protests against the compulsory wearing of face masks. Does that ring a bell? And the year before, in 1918, most US States had introduced Social Distancing measures, closed schools and theatres and banned mass gatherings, all of which also has a familiar resonance. Because back then they were dealing with Spanish Flu, there was no vaccine in sight and lockdowns were destabilising economies across the globe.

And that certainly rings a bell…

Between 1918 and 1920 Spanish Flu infected some 500 Million people, more than a third of the world’s population, and of those 17 Million subsequently died. So as anguishing as COVID 19 might be (and is), the social and economic impact of Spanish Flu was far worse than COVID: in large part because of the gruesome success of bodies like the Anti Face Mask League, something Donald Trump and his red faced “freedom” followers might want to bear in mind.

And just like today, back in 1920, it was difficult to see what the future would look like, because just like us, they were living in the heart of the disruption. So how did things turn out then?

Well, just five short years later, by 1925, the cinemas had all re-opened: audiences were packed to the rafters and, appropriately enough, watching Charlie Chaplin in The Gold Rush because the world’s economies were soaring too and construction projects were getting underway at unprecedented rates…the World had entered the Jazz Age and the Anti Face Mask League was rapidly forgotten. So there in a nutshell is the lesson of history, something we ought to keep front and centre of our thinking in these troubled times: a pandemic won’t change the future, it just brings it about quicker…

Take Indian Real Estate for example.

As a result of COVID the subcontinent’s residential sector had predictably slumped in the second quarter of this year, but in the third quarter (to September) sales in India’s top seven property markets (including Mumbai, Hyderabad and Chennai) had shot up by 34%, with 14,415 new builds. A powerful market mix of low interest rates, ongoing government growth initiatives and an increasing level of involvement on the part of Non Resident Investors (NRIs) had been supressed and concealed by COVID, but has now irresistibly re-emerged as lockdown measures start to be eased. We just couldn’t see it at the time…because we were in it.

And then there’s that reliable old bellwether of construction on the subcontinent, Cement Production, which is also picking up from a six-month slump: driven forward in particular by pent-up demand for new building and increased rates of rural residential building. India Cements held its (predictably virtual) AGM on Monday this week and forecasts quarter on quarter growth over the foreseeable future, as well it might.

These are precisely the sort of trends and signals that the immediate impact of COVID has tended to conceal… but at the same time COVID itself is a disrupter of (almost) unparalleled magnitude, so it’s just as likely to accelerate development of those trends. You just need to look for the signals…

Find out more about Red Ribbon Asset Management

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital through innovative programmes like the Eco Hotels Project.

Executive Overview

As I’ve said in the past, near and long term economic trends are likely to be a lot more important than any of our current fixations: and goodness knows we have enough of those at the moment.

So it’s certainly interesting that just as COVID has suppressed some key trends over the last six months, it may well also be acting act as a classic disrupter: accelerating core developments that may otherwise have taken a lot longer to emerge. All of which makes it all the more important that we keep our focus on the future.

growth india

The Prospect Theory of Gain… Why Climate Change isn’t a Single Issue Matter

By Climate Change, Eco Hotels, Environmental Policy, Mainstream Impact Investment, Sustainable Growth

Daniel Kahneman won the Nobel Prize for his “Prospect Theory of Gain”, the theory that losing a benefit and ending up better off is still worse than winning in the first place. Take a prosaic example: the National Lottery call you up to say they made a mistake yesterday and you’ve won £2 Million, not £3 Million. But you’re still £2 Million better off right? And then you find out the fellow down the road got a call too, and he won £2 Million: not the £1 Million he was told yesterday. Who feels happier? Both of you have £2 Million you never had before, the exact same sum down to the last penny: but, of course, it’s you that’s unhappier. Economists call this the Endowment Effect: precisely the same economic outcome can produce radically different reactions for purely emotional reasons. After all, the fellow down the road is probably cock-a-hoop with joy…

And all this is way more than a light-hearted parlour game: the angst of meeting a (purely relative) loss, animated by the green-eyed envy of seeing another’s (relative) gain, can have drastic consequences on how we go about dealing with some of the major challenges facing us across the planet today.

Take Climate Change for example…

The UK is committed to reducing greenhouse gas emissions to zero by 2050: there are no deep coal mines left in Britain and only four functioning coal-fired power stations all of which went offline for various periods this year and last, meaning that for the first time since the industrial revolution there was no coal-fired generation at all. All well and good you might say, unless you’re a coal miner or work in a coal-fired power station. But over in China, they’re still mining and burning coal like it’s going out of fashion (which in fairness, it is), and China’s emission rates are still going up from a 2016 base of 20.09%, compared with the UK’s more modest 1.55%, which isn’t such good news at all. But, unlike Trump’s America, China and the UK are both signatories to the Paris Climate Change Accords so, despite such variances, they’re still working to a common objective that can be expected to benefit them both (and Trump’s America too come to that).

So, here’s the question: who’s left feeling worse off between China and the UK? Daniel Kaheman would say it was the UK, because the UK suffered a loss in mining revenues, and the gain of cleaner air starts to look a bit tarnished as a result. On the other hand, China made a gain, so despite the fact, both are working towards a common beneficial objective, the irritating angst of relativism starts to kick in, meaning China must be to blame for the problem, which it just so happens is another of Donald Trump’s sound bites…the Planet just happened to get in the way of the angst.

That may all sound familiar in an increasingly polarised world, but does any of it really make sense?

Of course it doesn’t…and that’s because dealing with the challenges of climate change isn’t just a single-issue policy. One competing issue can’t be discounted against another: its not like someone setting out on a drinking spree, determined not to think about the hangover until it hits him tomorrow morning. The common purpose is everything and there’s no discounting to be done when it comes to the future of our planet: either everyone wins, or everyone loses. It’s as simple (and as complicated) as that.

Or to put it another way…burning coal is just the flip side of cleaner air: land on one side and you start to lose the other. So why focus on just one side at all? Burning less coal means breathing more clean air, so in the UK we’ve just had the equivalent of a call from the Environmental Lottery telling us we haven’t won small after all (as we may have thought), we’ve won pretty big. China’s news, at least for the short term, is not so good: but there’s no need to think of it as a trade-off, not when both countries (and many more) are moving forward to meet the challenges of climate change together.

If we can just raise our eyes from the complex politics of relativism, we might just find we’ve all won big.

 Invest in Red Ribbon Asset Management 

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital through innovative programmes like the Eco Hotels Project.

Executive Overview

We certainly need to raise our eyes from the short term and often highly political tangles of day-to-day politics, creating short-term obsessions that can so often blind us to the importance of longer-term strategic planning.

That’s why at Red Ribbon we’ve put Planet, People and Profit at the heart of our common vision for the future, and it’s not a lesson any of us are going to lose sight of.

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

Newsletter