The pollution in the environment has made the market slow down. Pollution is having an impact on people’s lives and their health. People are dying, getting cancer, and causing other respiratory illnesses.
As a result of this, people are not coming to the market to spend their money because they do not want to spend time outside getting sick.
All this makes the market suffer thus making it hard for people to make money. The government needs to invest in the cleanliness of the environment for this problem to end because until then it will keep getting worse.
Anyone who spends much time studying the financial markets knows that they are highly sensitive to factors outside of economics. This is why so many people spend so much time talking about “risk” in the market.
But there are other mitigating risk factors too, which investors should be aware of. One such factor is environmental sustainability (or lack thereof). Another is a trend that has been in evidence since early in this decade: the prevalence of bear markets.
In fact, when looking at the past 12 months alone, we have had seven separate periods in which stocks were in a full-scale bear market. With so many mini-downturns occurring inside of one major downturn, investors need to know how this affects their portfolios.
In the past 100 years, there have been numerous studies about the impact of environmental sustainability on financial markets. In fact, according to a 2006 study by the United Nations Environment Programme (UNEP), as reported by Environmental Leader, there is a strong correlation between environmental performance and economic success.
This means that nations around the world – and their markets – who take care of their environment tend to fare better than those that don’t. The UNEP study, which was based on a survey of 15 countries and more than 400 companies worldwide, concluded that “improving environmental conditions now could lead to higher rates of economic growth within five years.”
The impact of pollution on markets can be seen in the real economy as well. For example, last year China’s manufacturing sector expanded at its slowest pace since 2003. The country has long been considered a global economic bellwether by investors and economists alike due to it being the largest exporter and second-biggest overall economy in the world.
In addition, China’s stock market has been the best performer in the world over the past three years – and many investors have chosen to park their money here as a result.
But news about China’s economic slowdown and growing pollution concerns may be chipping away at global investor confidence, which could now expose further destabilization in the market, according to an article in The Guardian .
According to an HSBC report, the bank believes that the Chinese government will continue to “intervene in support of growth” until it can achieve its targeted annual growth rate of 7 percent. The world’s manufacturing powerhouse needs consistent strong growth to reduce the country’s reliance on debt-financing and -fueled infrastructure spending.
However, with reports suggesting that most of the country’s pollution comes from China itself, it is unlikely that this financial performance can be achieved in the long term.
Of course, pollution has also made its way outside of China.
According to Reuters, one study by academics at NYU and Cambridge University found that air pollution was responsible for up to 1.4 million deaths annually in China alone.
And in the US, studies have shown that pollution costs the economy over $1 trillion every year in health-related expenses, missed work and reduced productivity.
Considering this overwhelming evidence, it is pretty clear that environmental sustainability is quickly becoming one of the most important factors to consider when investing in any market.
This is even more important when considering that global markets are seeing more frequent bear market periods.
Environmental sustainability is more than just about the environment; it’s also an economic indicator. This means that, when looking at your portfolio, you should consider how some of the industries in which you invest impact the environment and if their business models include factors like investment in green technology or conservation.
Keeping the environment in mind when investing is now more crucial than ever!
Disclaimer: The contents of this site, such as text, graphics, images, and other materials contained on the page are for general information purposes only. This article is not a substitute for professional advice on the topics mentioned. This article does not create any form of offers to any legal or professional service. The site assumes no responsibility for errors or omissions in the contents. In no event shall the site be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action to follow the content, negligence or other tort, arising out of the use of the contents of the article. The blog reserves the right to make additions, deletions, or modifications to the contents at any time without prior notice. The site does not warrant that the site is free of viruses or other harmful components. It may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other author, agency, organization, employer or company, including the site itself. It also does not provide professional advice, diagnosis, treatment or any legal service. The site does not endorse official procedures, legal actions or qualified services and the use of its contents are solely at your own risk.