Category

Sustainable Growth

More Spark Plugs than Sustainability…The Green Industrial Revolution is already here and Boris has Missed the Bus

By Climate Change, COVID-19, Environmental Policy, Natural Capital, News, Sustainable Growth, United Kingdom

Boris Johnson may have many talents (it’s possible). But when it comes to climate change mitigation, facing up to facts isn’t one of them: his much trailed Ten Point Plan, flagged as a “Green Industrial Revolution” and launched earlier this month. This commits the UK Government to phasing out the internal combustion engine within the next decade and increasing investment in a range of new technologies, including the Flash Gordon sounding (and currently non existent) Jet Zero Aircraft and Green Ocean Liner.

But well intentioned as it might be, the Plan has more in common with spark plugs than sustainability, and especially so given (despite its snappy title) the Green Industrial Revolution is already well underway, with or without Boris.

It’s about time…

According to the UN based World Meteorological Organization (“WMO”), and despite the impact of COVID restrictions that resulted in short term reductions of between 4.2% and 7.5%, carbon emissions have now reached record levels: global warming has increased by 45% since 1990, with a “growth spurt” throughout 2019 added in for good measure (www.public.wmo.int). The last time there was such a sustained build up in CO2 levels was 5 Million years ago, and we weren’t around then to take note of the statistics then.

So what exactly is Boris planning to do to meet that challenge of the Green Industrial Revolution? 

Well, he aims to phase out the internal combustion engine by 2030 (see above) and that’s obviously an eye-catching measure, but the Ten Point Plan also commits the Government to investing £385 Million in the “next generation” of nuclear power stations.

Despite the fact that even if nuclear capacity was quadrupled by 2050 it would still only account for 10% of UK energy needs, not on any basis sufficient to replace fossil fuel generation and particularly so given the limited investment in wind and solar power envisaged by the Plan.

And that’s leaving aside the inherent dangers and the well-worn capacity of nuclear sites to generate dangerous levels of hazardous waste. It doesn’t sound especially environment friendly. 

Take another look too at that figure of £385 Million. Its chickenfeed bearing in mind the new Hinkley Point C Nuclear Plant Project is expected to cost £22.5 Billion: £3 Billion over budget and fifteen months behind schedule.

A new offshore wind turbine costs an average of £3 Million, so you could build 1000 of them for the cost of one Hinkley Point. In that context the Plan projects a meagre £160 million of new investment in offshore wind technology, so just 80 new turbines… chickenfeed.

The current shortsighted strategy?

And neither will the Plan commit the UK Government to phase out the current short sighted strategy of purchasing carbon offsets from abroad, meaning carbon emissions are effectively exported to territories with lower (non Paris compliant) protocols.

That’s hardly a full-throated commitment to truly international climate mitigation: as though importing “dirty” electricity is fine because it’s not produced in Hampshire. Tell that to anyone living next to a power station in Poland.

To be fair to Boris, there’s also a plan for more bicycles and footpaths, but bikes and boots on their own won’t amount to any sort of revolution: green or otherwise.

So, what about the Ten Point Plan?

In truth, the Ten Point Plan will leave the United Kingdom significantly behind the EU on climate change mitigation (www.ec.europa.eu.).

After Brexit goes live in January, the UK will silently fall out of the Bloc’s sharing arrangements on carbon reduction which are expected to deliver a 55% cut in emissions by 2030.

And India is well on track to secure carbon emission levels to meet a global warming goal of 2 Degrees Celsius within ten years (despite the peculiar challenges posed by its rapidly burgeoning population and fast expanding economy): 40% of the subcontinent’s electricity will be non fossil fuel generated by 2030 and “emission intensities” will be a third of 2005 levels by the same date.

The subcontinent has also increased solar capacity by 1,200% since 2014 and introduced groundbreaking initiatives to minimise domestic consumption levels. In stark contrast the UK Government has actively promoted measures that reduce solar capacity and done little or nothing to reduce consumption.

In short, while Boris scrambles around to define his Green Industrial Revolution the rest of the world has already moved on… the future already belongs to sustainable innovation.

Red Ribbon (www.redribbon.cohas always been committed to pursuing Mainstream Impact Investment strategies that are not only consistent with sustainable growth but also offer above market rate returns whilst at the same time protecting precious natural resources through innovative programmes like the Eco Hotels Project (www.ecohotelsglobal.com).

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

Welcome as they might otherwise have been, I can’t help feeling a little disappointed by the obvious lack of ambition in the UK’s Plans for a “Green Industrial Revolution”: not least because they seem largely ignore the radical steps being taken elsewhere in the world on climate change mitigation, and particularly in India.

But having placed Planet, People and Profit at the heart of Red Ribbon’s corporate vision since it was founded more than a decade ago, I remain on any basis committed to the long-term potential of those international strategies, whatever the short-term future of the Ten Point Plan might be.

Better Connected than Ever? – How Connectivity boosts Indian Real Estate.

By Affordable Housing, Blackstone, Construction Technologies, COVID-19, Economic Growth, Environmental Policy, Housing Need, Housing policy, India, Natural Capital, News, Real Estate Markets, Sustainable Growth

All roads lead to other roads: a dizzying complexity of cables, rail and road networks have literally girdled the earth, making us better connected than ever before. A hundred years ago it took twenty days to travel by steamship from London to Mumbai, now it takes nine hours by plane.

Subject to lockdown restrictions, you can cross the English Channel in two hours by ferry (plus three more waiting for the driver in front to get back to his cab), or else zip through the Tunnel in 30 minutes; and the electrons that carry your Internet messages travel at 2,200 Km a second, which is probably why Zoom is doing so well at the moment.

But none of this happened by accident: it was all planned, built and delivered to meet economic demand…except, of course, the electron, which does what it does by itself. Economic progress is everywhere driven by connectivity.

And that’s where Big Government comes in: periodic swings in the private funding cycles needed to build all those airports, roads and railways are increasingly being offset by government deficit spending programmes (or quantitative easing as it’s now known: the deficit’s more attractive, younger sister). Only big government is big enough to dampen regular (and inevitable) private sector investment fluctuations, which is why most advanced economies over the last forty years have set fiscal spending targets of up to 20% of GDP.

Nothing less will level out the swings and troughs, and without it the roads, railways and airports won’t get built at all…the Channel Tunnel started out as a private venture, ran out of money and finished up nationalised in all but name. Without Big Government you wouldn’t be able to zip under the Channel …you’d be stuck behind a lorry at Dover.

It’s a lesson India has taken to heart.

Connectivity boosts Indian real estate. How?

Over the next ten years the subcontinent is expected to invest a staggering $715 Billion in its new rail networks, with full electrification expected by 2024 and the entire system becoming carbon neutral by 2030 (www.ibef.org/industry/indian-railways).

By 2050 India’s railways will comprise 40% of rail services across the world, meeting a surge in passenger numbers driven by an increasingly wealthy travelling public. All of this is being powered by Big Government (Prime Minister Modi’s Government to be precise): including a programme to expand investment in new rail terminals, new stations and more extensive container operations across the subcontinent (www.outlookindia.com).

And the picture is pretty much the same on India’s highways where the network has doubled in size (from 71,000 Km to 142,000 Km) in the last ten years. As with rail, the expansion is being driven at pace to meet unprecedented levels of demand from a burgeoning and increasingly wealthy population, in stark contrast with the United Kingdom where road traffic levels have increased by 80% over the last twenty years, but capacity has risen by a sluggish 10% annually: and even that unimpressive figure is falling off year by year.

All of which means India is now better connected than ever before; and in combination with those same (unprecedented) demographic trends on the subcontinent, enhanced connectivity is also having a radical impact on India’s domestic housing markets. New Science parks in Chennai and Bangalore and new railways and highways in Mumbai are pushing prices through the roof as an increasingly urbanised population embraces the opportunities offered by better communication systems.

The improvements to connectivity boosts Indian real estate. So with all roads leading to other roads, it means we’re better connected than ever before…but nowhere is that more apparent at the moment than India.

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

I suppose it’s a truism that property values are all about location (and location, location): but what’s interesting in India at the moment is just how radically the location itself is changing.

Taken together with an increasingly wealthy, tech savvy and burgeoning population, the Modi Government’s radical infrastructure programmes are re-shaping the commercial environment and pushing property prices higher than ever before.

Back Again, Front and Centre…Joe Biden has Climate Change Top of his Agenda and he’ll find a Key Partner in India

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

Joe Biden intends to reverse Trump’s “dangerous and destructive climate policies” (Joe’s words), and whatever delusions Trump might still entertain on Twitter, Biden is the President Elect of the United States.

Under his stewardship the United States will re-join the Paris Climate Accordson day one” of the new Administration, work to “seek higher ambition from nations across the world” (Joe again), and “follow the science” to reduce emissions while protecting precious resources. So climate change mitigation is back, front and centre …and it’s about time too.

Over three turbulent years Donald Trump systematically cut a swathe through a raft of environmental protection measures: enabling mining companies to dump waste in local rivers, removing prohibitions on methane gas emissions and even abolishing prohibitions on (endangered) species of birds being shot out of the sky and their lifeless bodies made into ashtrays for sale in tourist shops (I’m not making that up). So whatever you might think of Donald Trump’s chutzpah and mutton headed resolution, he was demonstrably bad for the environment.

The stage is finally set for the United States to resume its role in climate change mitigation across the globe, and the totemic significance of Biden’s intention to reaffirm the Paris Climate Accordson day one” simply can’t be ignored.

The US will now be freed up to move to zero carbon emissions from power plants by 2035 (instead of actively promoting fossil fuel dependence under Trump); freed up to dramatically expand solar and wind energy production and to stop endangered birds being made into ashtrays.

So, how are Joe Biden and climate change the perfect partners for each other? Well, the new Biden Administration will also look to build 60,000 new wind turbines, new community solar infrastructure and 500 Million more solar panels across the country within the next five years: and the obligations imposed by (and freely accepted) under the Paris Climate Accords are the backbone of those commitments.

Joe Biden and Climate Change

The Biden Administration’s Green Deal (www.joebiden.com/climate-plan/) is budgeted to cost an eye watering $3 Trillion.

But take a look again at the elements of that package, and in particular the central part played by solar and wind power generation: those are positive and eye catching strategies in contrast to (negative if necessary) emission controls.

On that front India is already a world leader in the production of renewable resource energy: by September this year 36.7% of its capacity was sourced renewably and the subcontinent was also the first in the world to create a Ministry of New and Renewable Energy. It is a net exporter of wind turbine and solar technology to the United States and, especially in its Northern States, India has the perfect climate to power those technologies as well. By 2022 Prime Minister Modi’s Government is planning to install 40 GW capacity of new solar panels on rooftops throughout the country and intends to generate 57% of its total energy needs from renewable sources by 2027 (www.sustainabledevelopment.un.org): 17% in excess of its Paris Climate Accord commitment.

So this much we can certainly be sure of: as the world turns slowly back onto its axis, Joe Biden won’t find a better environmental partner than India.

Red Ribbon Asset Management (www.redribbon.co) has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on an unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, the Red Ribbon Private Equity Fund (www. redribbon.gi) offers unique opportunities to share in this potential.

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

I don’t know how history will finally judge the last three and three quarter years of US foreign and domestic policy, but I do welcome the change signalled last week by the President Elect for a new approach to climate change mitigation.

And, of course, that approach isn’t really that new after all. Most nations across the world have maintained their commitment to the Paris Climate Accords since 2016 and will, I’m sure, welcome the US back into the fold.

Nowhere more than India…

A Disruptive Innovator…Modular Construction has become Housing’s Future

By Affordable Housing, Construction Technologies, COVID-19, Economic Growth, Environmental Policy, Housing Need, Housing policy, Modular Construction, News, Productivity, Sustainable Growth

“The arrogance of success is assuming what you did yesterday is enough for tomorrow”: William Pollard wrote that 100 years before Disruptive Innovation theory was formulated in 1955’s Harvard Business Review, but he perfectly captured the essence and importance of understanding disruption innovation in a modern economy.

Think of established companies like Amazon, Google and Uber, business models that have all disrupted existing markets and delivered outcomes that are radically reshaping our future (and our present come to that).

But disruptive innovation is driven as much by market need as invention, and burgeoning housing demand across the planet is currently driving change like never before…so welcome to the world of Modular Construction, and a new future for housing.

Using outmoded technologies, traditional construction companies have become increasingly focused on long-term (high value) projects, where profit margins are high enough to nurture a culture of inefficiency.

All those piles of rusting steel and timber left scattered around when the project finishes, fossilised remnants of yesterday’s world: all those days lost to rain when workers huddle in huts waiting for the sun to come out, and still more days lost waiting for delayed (piecemeal) deliveries, brought slowly to the site by a seemingly endless convoy of lorries.

But, by definition, all that waste matters more if margins are tighter: on lower margin projects, waste and delay on such an industrial scale can turn a viable development into a loss-making disaster.

That’s why traditional developers have (traditionally) paid far less attention to affordable and mid market housing projects, preferring to focus on profitable customers and build yet another penthouse studded glass tower: the inefficiencies of their business model matter less when the client is a Russian oligarch.

Which means more rusting steelwork, more days lost and more time wasted waiting ankle deep in mud for the latest lorry full of bricks to make its way at walking pace through another inner city traffic jam. This outdated model largely ignores speed of delivery, because speed of delivery largely doesn’t matter. Russian Oligarchs have all the time in the world…they can wait.

But the homeless can’t wait: according to Shelter (www.shelter.org.uk) 320,000 people are currently homeless in the United Kingdom (one in 201 of the population), in the United States the figure is 567,000 (a year on year increase of 40% since 2017), and in India 1.77 Million are in housing need despite the Modi Government working to deliver its ambitious Affordable Housing Programme (www.bajajfinserv.in/housing-schemes), striving hard to meet the demands of the fastest growing population on the planet.

And that’s where disruptive innovation comes in…

Adopting smarter and more efficient technologies, smaller construction companies can challenge these dinosaur incumbents: targeting market segments they either can’t or won’t reach, and that means in particular the homeless and those in housing need.

Economic orthodoxy tells us these smaller (disrupter) companies will then move on to gain a progressive foothold in increasingly higher margin segments by delivering better functionality at a lower price.

By making use of their core technological advantage: and finally, the dinosaur developers will also adjust their own business model as disruption takes root: bad news for Russian oligarchs looking for another penthouse, good news for the rest of us.

Modular Construction is a paradigm case in point: units are fabricated off site and delivered in ready to build panels, so no more convoys of lorries delivering materials piecemeal and no more waiting endlessly for them to arrive.

Built to order in a controlled environment, modular units are also higher quality and waste levels are lower, and costs are lower too.

It enables modular platforms to deliver projects at a third of the cost of traditional alternatives, which is why they are moving into (and will eventually take over) lower margin segments in a way traditional developers at the moment find unfathomable.

And it’s why in time dinosaur developers will be forced to change their business model …that’s the power of disruptive innovation.

What we did yesterday is no longer sufficient for tomorrow: Modular Technologies are important for all our futures.

Find out more about Modulex

Modulex modern method of construction

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

According to McKinsey more than 80% of developers are now to a greater or lesser extent committed to modular construction models: that should come as no surprise to anyone. Modular construction delivers faster, at lower cost and with higher quality thresholds than traditional alternatives.

And now, more than ever, we need those benefits to meet the planet’s burgeoning housing need. It’s time for the world to move on…

COVID or no COVID…Demand Trends across the Indian Housing Sector are signalling stronger growth

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

India’s Real Estate sector is the second biggest source of employment on the subcontinent, and a key driver for meeting housing and infrastructure demands across the fastest growing population on the planet. But, of course, COVID lockdowns brought a sudden halt to construction, with many workers returning to their hometowns and leaving sites at a standstill. So, as the industry emerges from its enforced slumber, what do current trends in the Indian housing sector demand tell us about the wellbeing of this vital part of the economy?

Well, the first point to make is that, like most economic shocks, COVID will inevitably be short lived in the long life of the country, but it will also accelerate key changes in the near term …

Phased construction activities have already resumed and more property sales were registered on the subcontinent from June onwards than in COVID blighted March to June. As a result developers are reporting that between 80% and 90% of their labour force is now back on site, and there has been a parallel blizzard of Government MOU’s inviting tenders for new public sector building projects, especially in Bangalore and Chennai (more of which in a moment).

The Indian Government has been particularly anxious to kick start supply side metrics by offering developers a wide variety of incentive packages, including a recently announced six-month extension in project deadlines under the RERA Force Majeure clause.

And back in March The Reserve Bank of India announced a three-month moratorium on developer loan interest (later extended to the end of August: (www.rbi.org.in), as well as a typically aggressive quantitative easing programme which injected a further $ 24.4 Billion into the economy, enhancing short term liquidity for developers and home buyers alike: stamp duty was also reduced as were property registration fees in many States. 

On the demand side, rates for buyers looking for loans are currently running at their lowest for twenty years (about 7%), with added tax exemptions too including a rebate on loan repayments up to $4,747 annually. Small wonder then that key economic indicators have been showing an uptick in the subcontinent’s property markets since September, with a much more positive growth trajectory (expected to tick up further over the next twelve months). 

JLL India reported recently that the first signs of this recovery in the housing market are being seen in major conurbations (with IT magnets like Bangalore and Chennai leading the way: www.jll.co.in), manifesting itself in particular in the affordable and mid-price segments: the Survey found more than 50% of prospective homebuyers are expecting to complete their purchase within the next six months, so it seems the uncertainties of COVID have actually reinvigorated that most basic of human instincts: a home of your own…and one you can move into quickly.

The way Indian homes are being bought is changing too: consumers are determined to move in as quickly as possible and that, combined with GST exemptions, means so called ready homes are currently winning out over off plan sales (which, by their nature, take longer to deliver). That trend will inevitably favour developers making use of modular technologies. Speed of delivery is, after all, everything in the post COVID era and Modular Technologies deliver three times quicker than conventional construction techniques (www.modulex.in).

In turn this has led to a demand side shift in property price structures: off plan properties for completion in six to eight months may not qualify for stamp duty exemption, but the inbuilt delay in completion means they are now 10% cheaper than the ready home alternative: this will fuel greater near term demand as buyers seek out less expensive options, so both models should see benefits as we emerge from the cloud of COVID.

And as we pointed out on this site recently, government funded programmes are also playing their part. India continues to expand its infrastructure base like never before (COVID or no COVID), and that brings us back to Chennai…

Property prices in in and around the conurbation were more or less static between April and June, but from June onwards analysts reported a rapid increase in demand for the ready home, affordable and mid-price segments (see the Insite quarterly report produced by property portal www.99acres.com). Demand for affordable housing in Chennai has risen by more than 60% this quarter, and a key factor is public infrastructure. Affordable properties within easy reach of the new Siruseri IT Park saw a 9% increase in demand (for sales and rentals), and new highways and improved connectivity to the northern and southern belts of the City have seen sales from Sholinganallur to Tambaram skyrocket. The influx of IT workers together with all those new highways and science parks are pushing prices the roof.

So across the vast territory of the subcontinent, demand in the Indian housing sector is trending inexorably upwards…COVID or no COVID. That can only be good for the future of the economy.

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

The subcontinent’s real estate markets are starting to move steadily forward: supported by innovative Government and Central Bank initiatives, but most of all by resurgent levels of consumer demand.

Construction is already (and always has been) a key element of the economy so that can only bode well for the future.

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