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On September 12th, 2022 President Joe Biden passed the Inflation Reduction Act (IRA) with the express purpose of accelerating ‘clean energy innovation, manufacturing, and deployment in a way that cuts consumer energy costs, creates well-paying union jobs and sustainable and equitable economic opportunity, advances environmental justice, and addresses the climate crisis’. The act itself contains some of the most ambitious climate measures in US history and will continue to boost an already growing clean energy economy.
The official goal of the IRA and one of its main priorities is to invest public dollars effectively and efficiently, inevitably benefiting sustainable investors. The US government is actively encouraging investments to participate in greener and more sustainable projects. Specifically, $369 billion for subsidies and tax credits into renewable electricity production, energy storage, clean vehicles, greenhouse gas reductions, and more sustainable projects. The IRA also includes $5 million for the Environmental Protection Agency to support the “standardization and transparency” of corporate climate disclosures, which (as we’ve discussed in previous blog posts) is much needed in the sustainable investing space. Outside of the obvious environmental benefits, there’s also the matter of social benefits this act will provide, such as preventing deaths caused by asthmatic attacks. Not only is this good news for the people vulnerable, but it also means a decrease in lost workdays caused by these deaths. Sustainable investors have much to look forward to in the coming years as progress on this act is carried out, and will financially benefit from the increased funding of more sustainable projects and ventures.
One of the main benefits of sustainability investing was the inherent risk mitigation that came with it. Companies that produce large amounts of greenhouse gas emissions, waste, and energy without significant change put themselves and everyone else at risk of extreme weather patterns, increasingly dangerous living conditions, and supply disruptions. Now that governments are becoming more proactive in mitigating the effects of climate change, sustainability investing is no longer just an issue of risk mitigation but an opportunity for investors to grow and maintain their own financial wealth for the long term.
Physis is a fintech company that offers investors a variety of sustainability offerings and data to manage, track, and understand the impacts of your investments. We make it easy for institutional investors to prove the sustainability of a company or fund beyond the ambiguous ESG score. Find out how we can help you today!