Introduction
Rapid global industrialization has posed significant environmental challenges such as climate change, air and water pollution, and degradation of natural resources. The consistent rise in the world population ad increased urbanization has also significantly contributed to environmental pollution and a decrease in global food production. Overexploitation and human activities pose serious threats to the environment and human health (Xie et al., 2019).
In the recent past, global leaders and environmental organizations have been fighting the traditional notion that economic benefits can only be achieved at the expense of social benefits and creating awareness about shared value. Today, organizations have realized the benefits of environmental and sustainable investing. Research has also shown that corporate social responsibility increases company profitability in the long run. More companies worldwide are embracing sustainable development and green recovery policies and deviating from the conflict between economic growth, social benefits and environmental protection. In the recent COP27 held in Egypt in November 2022, countries across the world came together to discuss the world’s climate change collective goals, with many developed and developing countries promising to reduce their carbon emissions and achieve green economy transformation and clean energy transition (Kumar et al., 2019).
Of importance, however, is that sustainable environmental transformation can only be achieved with sufficient financing. Take an example of the planetary boundary, for instance. Controlling any of the environmental boundaries issues requires large financial allocations. There needs to be more public funding to take good care of the environment, which has necessitated bringing private entities on board. Due to the large upfront costs and long return on investment period, many private entities have yet to be convinced about environmental financing. This research paper looks at the companies investing in the thematic areas of climate/energy and sustainable agriculture (Mercereau et al., 2020).
Climate/energy
The issue of climate change has continuously caused increasing alarm about the danger it poses to human survival. Carbon dioxide emissions have reached their highest, damaging the ozone layer. The Effect of climate change has been observed in almost every part of the world, from the increased global temperatures, melting glaciers, and increasing sea levels. A large proportion of the climate change contributor has been human activities such as industrialization and diesel-fuelled vehicles.
One company on the front-line fighting climate change is Tesla Inc. Tesla, an American multinational corporation that manufactures and distributes electric vehicles. The transport sector Is among the greatest contributor to persistent climate effects due to the high levels of carbon dioxide emission. According to the World Resource Institute, the transport sector accounts for 30% of US greenhouse emissions and 17% of global greenhouse gas emissions (Bose et al., 2021).
According to the CEO of Tesla Inc., Elon Musk, Tesla is committed to pioneering the transition to clean energy through large-scale production and distribution of electric vehicles worldwide. Musk says that the little CO2 emitted through the electric battery recharging is decarbonized using well-established technologies. Moreover, at the end of the car’s life, the battery pack is unlimitedly recycled and used to build a new battery pack. This is a significant impact considering internal combustion engine vehicles produce approximately 70 tons of CO2 during their use phase. On top of that, greenhouse gases resulting from burnt fossil fuels are hard to decarbonize as carbon capture is not economical in the modern economy (Le & Ho, 2021).
According to the Tesla 2021 impact report, the global fleet of tesla vehicles, energy storage and solar panels prevented the emission of 8.4 million metric tons of CO2. Of the 8.4 million metric tons of CO2, 6.8 million metric tons were saved during the vehicle use phase, and 1.6 million metric tons were saved through solar panels in energy generation. According to Tesla’s Cumulative Net Energy Impact Report, the company generated more clean energy than it consumed in its vehicles and factories between 2012 and 2021. The company is leading by example toward clean energy transformation ((Le & Ho, 2021).
The core mission of Tesla Inc. is to accelerate the world’s transition to clean energy. Tesla understands that the issue of climate change affects the general global population. Therefore, to achieve significant outcomes, it must scale its production capacity and increase the accessibility of its products across the world. To realise this goal, the company’s strategic plan is to be able to sell 20 million vehicles and deploy 1500 GWh of energy storage per year by 2030. The logic is that if the company can achieve such a global vehicle network, it would achieve great milestones in reducing CO2 emissions to the environment. Tesla has largely invested in research and development to improve the technology and innovation of its products to adapt to emerging challenges and ensure user safety (Le & Ho, 2021).
Sustainability is the backbone of Tesla Inc. It drives every aspect of the company from its values, mission, and culture. Tesla’s customers and shareholders are environmental, and climate change advocates focused on transforming the transport sector in the US and globally. Tesla uses the funds from investors ad customers to implement programs and initiatives geared towards a zero-emission future at their global manufacturing facilities and in their local community.
The road to greenhouse gas emissions is long and can only be addressed by restructuring energy generation and consumption. By directly reducing carbon emissions in the transport and energy sector, energy will be a step ahead in addressing global energy habits. Basing the whole transport ecosystem and the supply chain on clean energy will greatly benefit climate change. In August 2017, Tesla issued $1.8 billion worth of senior bonds due 2025 for environment-conscious investors who mind clean energy investments (Mercereau et al., 2020).
The main challenge with electric vehicles has been the high costs compared to gas-powered vehicles. Tesla prices their vehicles to target middle-income earners to serve more population. Tesla believes there should be no trade-off between sustainability, performance, and affordability. It is possible to include all three elements in one package. There also has been the challenge of ignorance and lack of awareness of the environmental damage caused by internal combustion engines. Therefore, they have yet to embrace electric vehicles fully. The need for more supercharger stations also makes ownership of electric vehicles inconvenient.
Sustainable agriculture
Sustainable agriculture is agricultural practices that optimize the current generation of food production without interfering with the future generation of food production. The world can produce enough food for the current population, ensuring global food security. However, bad farming practices and natural disasters caused by human activities pose the risk of reduced food production, especially for future generations. For instance, deforestation has increased the rate of desertification and affected the rain patterns in some areas reducing food production. In this section, we look at how Bayer AG has invested in sustainable agriculture through environmental facing and impacted the lives of millions of small-scale farmers. In the last three years since the outbreak of the covid 19 pandemic, different businesses ad policymakers have mobilized resources to invest in sustainable agriculture (Addison et al., 2020).
Agriculture is at the epicenter of the global innovation hub, where the role of environmental finance is to accelerate the adoption rate of technological innovation for the benefit of the environment and the communities in it. More organizations are coming together to address the world food crisis to increase the world’s food security. These organizations are working collaboratively to develop new technologies, inputs, and sustainable farming practices that are pro-social ad pro-environment (Allen et al., 2022).
Bayer AG is a multinational corporation centered in life sciences, particularly healthcare and nutrition. Bayer designs its products and services to help people and the environment survive by advocating techniques to tackle emerging challenges from the rising and aging global population. Moreover, the company is devoted to steering sustainable development and generating a positive social impact through its business ventures. The company believes that environmental financing increases the earning power of enterprises ad creates value through innovation and growth.
In May 2022, Bayer signed a Zero Hunger Private Sector pledge and made a $ 160 million commitment aimed at helping the globe in the fight against hunger. Bayer recognizes the need for the private sector to work together with the public sector to end global hunger. By pledging, Bayer promised to allocate more resources, money, and expertise to end hunger in African, Latin America, and Asia communities.
As a global leader in agriculture, Bayer based its Zero Hunger Pledge on several levels. First, it aimed at helping small-scale farmers access quality seeds, creating awareness of sustainable agriculture, helping the farmers with better approaches to their problems, and educating them on income diversification. In its commitment, Bayer pledged that $ 100 million would be invested in research and development to get quality vegetable seeds to small-scale farmers and donate more to not-for-profit organizations (Tao et al., 2022).
According to the president of Bayer’s crop science division, covid 19 pandemic has left many loopholes and unhealed scars in many people’s lives, especially small-scale farmers. The pandemic heightened the already economic conditions, especially for low-income earners making life more and more complicated. Many struggled to provide for their families, and more people became homeless. He further adds that the pandemic affects us all, and it’s our collective responsibility to support each other.
The outputs of sustainable agricultural investment are increased in the agricultural produce within the small-scale farmers. More families will now be able to feed their families throughout the year until the harvest and be left with more for trading. In addition, the outcome will be better agricultural practices such as agroforestry and crop rotation. There will be reduced land overexploitation resulting from agricultural education, reduced soil erosion, and better pest control methods. The impact of Bayer AG’s investment will be higher agricultural sustainability and increased food security worldwide (Lang et al., 2017).
Bayer AG usually uses blended finance in environmental fiancé and instils the social impact of sustained agriculture. The company prepares grant funding and strategically uses philanthropic funding to seed investments in sustainable development goals. Through Bayer’s financing, there is reduced cost of inputs for small-scale farmers ad better environmental protection.
Conclusion
Environmental financing is an area of interest, especially at such a crucial moment when the world is on its knees due to climatic change and unsustainable production. The high global warming effects have continued to get more severe worldwide. There is an urgent need for environmental financing to mitigate the environmental externalities and enhance sustainability. Economists and environmentalists have dismissed the traditional opinion that corporate social responsibility reduces the company’s profitability. A company can create value for its investors and generate social benefits simultaneously through shared value. There are several investment vehicles through which the public and public sectors can raise money for sustainable environmental investment, including senior green bonds like the ones used by Tesla and blended finance used by Bayer (Rohwerder & Szyp, 2022).
The government and other public entities need to raise more money to take care of all the thematic areas of environmental finance. Environmental projects are very capital-intensive. More private sector companies should get on board as this is a global collective responsibility. Private entities should remember that, unlike the traditional misconception, social corporate responsibility results in a shared value which means that both the company ad the society benefits. Tesla Inc and Bayer Inc are among the many private sector companies that have stepped up in environmental financing and are positively impacting global climate control and developing sustainable agriculture (Lang et al., 2017).
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