Climate change and sustainable environment is suddenly taken seriously by companies and investors since G20 Summits have started focusing on the same. Recently finance minister Nirmala Sitharaman has announced a “Green Credit Program” as well which will incentivise the companies, individuals and local bodies that adhere to sustainable practices under the environment (Protection) Act and help mobilise additional resources for such activities.
When every company is using “Green” to gain traction of the investors, customers, and every stakeholder, let’s understand a few important terms related to green that you must know:
Green chemistry, also known as sustainable chemistry, is the design of chemical products and processes that reduce or eliminate the use and generation of hazardous substances. Its principles are based on the idea that chemicals should be designed and used in a way that minimises its impact on human health and the climate.
It includes reducing or eliminating toxic substances, using renewable raw materials, and minimising waste and energy consumption. Companies like L’Oreal, a French beauty major, have committed to reducing 95% of the products made of natural or bio-sourced by 2030.
Green realty, also known as sustainable real estate, refers to the practice of designing, constructing, and managing buildings that minimise their impact on the environment and promote sustainability. The goal of green realty is to create buildings that are energy-efficient, resource-efficient, and environmentally friendly, while also providing a healthy and comfortable living or working environment for occupants.
For example, using solar energy throughout the building, rainwater harvesting, composting, water recycling, and wind turbines. According to a McKinsey report, real estate is responsible for 39% of carbon emissions, which can be reduced drastically if the real estate industry opts for Greens.
Green data centres
Green data centres are data centres that have been designed, built, and operated to minimise their environmental impact and maximise energy efficiency. A data centre is a facility used to house computer systems and associated components, such as telecommunications and storage systems. Green data centres use a variety of strategies and technologies to reduce their energy consumption and carbon footprint like virtualisation and energy efficient hardwares.
Green government projects
Well you must know where your tax-money is going? Green government projects refer to government initiatives and programs that promote sustainability and environmental protection. These projects aim to reduce the negative impact of government operations on the environment and to create more sustainable practices, for example projects related to solar energy.
Recently, RBI has raised ₹8000 crores to accomplish green projects such as solar power, wind and small hydro projects and other public sector projects that help reduce the economy's carbon footprint.
Green investments refer to investments made in companies, funds, or projects that are environmentally sustainable and socially responsible. These investments aim to generate positive returns for investors while also promoting sustainable development and reducing environmental impact. For example investing in Sovereign green bonds issued by RBI.
It is important to understand the terminology company uses, however, it is more important to evaluate whether the promises made by companies are fulfiling or not. If you are investing in green, it means you are investing in the future of the world, not only a country.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com
Disclaimer: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.