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Sustainable Investments in Cannabis And How They Can Change the World By Andrea Morhardt Just as fast as new cannabis strains pop up, unique investment philosophies and strategies emerge every day. One such emerging system has investors weighing the financial returns an investment produces against a company’s consciousness about sustainability. It’s called sustainable investing. And investors everywhere have their eye on the cannabis industry to be a significant player in this movement. What is Sustainable Investing? The strategy aims to encourage, support, and create momentum for companies who exhibit responsible environmental behaviors. Another part of the strategy, naturally, is profiting from these forward-looking, innovative behaviors. But the most serious sustainable investors will accept lower financial returns in return for the peace of mind that comes from supporting companies with a moral compass aimed at environmental sustainability. Why Sustainable Investing? You may be wondering why an investor would do such a thing. Investors invest their hardearned money, and most companies are founded in hopes of generating profits — not to save the world — right? Not so fast. According to the Circularity Gap Report 2020, only 8.6% of the global economy is currently circular. You might assume the answer is “yes.” But the answer is actually “not necessarily.” Today’s investors and corporations are becoming more and more environmentally conscious and are finding new strategies that can be profitable and environmentally sound at the same time. Environmentally concerned investors are 38
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looking at the status quo of the global economy and its traditional investment strategies. As a result, they’re feeling uncomfortable about putting their money behind businesses that — they believe — are damaging the earth. Here’s what has sustainable investors concerned: According to Accenture, by 2050, maintaining the current global economic structure, which is almost entirely linear and focused primarily on production, could result in overusing the earth’s capacity by more than 400%. Although the world has operated with a “linear economy” focused only on production for centuries, this linear model produces incredible amounts of waste. Consider this information from the Ellen MacArthur Foundation: • Every second, the textile industry produces the equivalent of a garbage truck full of waste that ends up incinerated or in a landfill. • The food industry throws away enough perfectly edible food to fill six garbage trucks in that exact second. Investors who feel outraged by these statistics — and countless others — are taking action. They are reallocating their portfolios to invest in innovative companies focused on moving the needle toward a circular economy. This circular approach eliminates waste by creating a closed-loop system. Such a system keeps the production loop “closed,” so all materials produced stay inside — rather than having some funneled off to a landfill. The materials remain within the loop because the system is engineered to reuse byproducts as future inputs. The traditional linear business model is not
sustainable, so sustainable investors are eager to invest in companies that adopt a more circular approach in their business models. Are Sustainable Investors Really This Altruistic? Not all investors putting their cash behind sustainability-focused companies are doing it for the “kumbaya” reasons you might think. Sustainable investments can produce significant returns. The circular model ultimately minimizes labor and energy costs with strategies powered by renewable energy and innovatively recycled materials. By reducing these costs, companies can see a
