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This Will Help You!

I think I've got some interesting points that just might convince you to divert a little of your money – and even perhaps to make a 7% return.

I don't often write about the ethical, ecological, responsible, “doing good” or social aspects of lending. Hardly anyone clicks on headlines like that. Yet now that I've tricked you into this one with my vague title, would you give me a few minutes, as:

We need two Earths – even when taking care of our carbon footprint

In the West, our individual footprints in carbon and carbon equivalents (i.e. other greenhouse gases) are typically around double our “personal allowance” of roughly four tonnes. (That's very rough, because impossible to get precise figures.)

This means that we'd need two Earths to sustain it. And that's even when we try to reduce our impact: rarely travelling by car, keeping the heating off, flying less, buying less stuff, and caring for the environment. For those who don't do anything to reduce consumption, it's more like three Earth's that are required.

We might feel good about making any efforts at all – and we deserve to – but the unfortunate truth is that even relatively green lifestyles still simply remain beyond the planet's ability to deal with carbon dioxide and other carbon-containing, greenhouse gases, if the whole eight-billion strong population lived like us.

This means that, unless we want to live in a way that frankly would make most of us very unhappy, the only way to shift the bulk of our excess carbon footprint is to get involved in projects that offset our usage.

You're still not a bad person

First (and I think foremost, even though I haven't got to the lending part yet): this doesn't make you a bad person. Regardless of how much or how little you do for the environment or what your views on climate change are.

No matter how low the carbon footprint of the most ecological person you know, hardly anyone is such a martyr as to actually minimise their lifestyle to the extent that it makes them unhappy – whatever level that is for them.

Saints like that are a wonder to be admired and we could be grateful for their example. But there have been few confirmed saints for a good reason; they are simply very special in that way.

Secondly, any reductions you've consciously made are a contribution and all those efforts add up and make a difference.

Thirdly, it's not all about you! You can have an influence on others too, which means you're having an impact that wouldn't have happened without you.

I would suggest a good starting point is to encourage people to estimate where they stand now. While no online calculators are perfect, you can still use them regularly to measure the improvements you've made. Here you can see the carbon- (and carbon-equivalent) footprint calculator from the WWF.

Bear in mind when getting your results from that calculator that the WWF is being forward-looking. It assumes the UK will implement measures to achieve its climate targets over the coming years, which substantially lowers the tonnes of carbon that it estimates that you're currently responsible for. To re-estimate your actual carbon equivalent output today, I would add on five tonnes to the answer the calculator finds for you, as an approximation of you current impact.

In case you're confused, the WWF sometimes refers to its own calculator as an environmental calculator and its results as outputting your “environmental footprint”, but actually its looking at your climate impact through carbon and other greenhouse gases only, outputting the result in terms of carbon equivalents.

Fourthly, we can offset our climate impact. But – to get somewhat back onto the point that makes the most sense on 4thWay – not only can we offset, the best way to offset our carbon footprint actually involves lending money – earning an income!

How this will help you

If you estimate your carbon footprint and thereby recognise the difficulties of living within your fair share, you can then move beyond the despair to doing enough.

This may sound like cheating or excuses or that it's too easy to be real, but that doesn't change the fact that projects to offset carbon do work – and it will be you who's making that happen.

For most of us, the cost of offsetting our excess carbon can be as low as a few thousand pounds per year.

Since the cheapest way to achieve the greatest offsets is through money lending, you might even get your money back along with a return. So you could recycle your loans to offset continually.

The cheapest way to offset carbon – and earn a return

We have a lot of options for offsetting, but the cheapest way currently is solar power.

The technology is reliable and monitoring isn't as essential or difficult with solar as it is with, e.g. tree-planting, where it's far easier for others to game the system.

(Not that I'm against supplementing your support of solar with well-vetted tree-planting projects as a hedge and so that you can also improve your timber footprint.)

Your investment also has pretty good endurance, because solar panels can work for decades. The panels will usually live on even if a borrower fails to repay you, so your loan then turns into merely a donation to improve the climate, rather than an investment.

…But don't you think you might well have donated anyway if no investment options were available? Plus, my research finds you probably would have offset less carbon if you'd merely donated, because the projects I could find based on donations weren't as cost-effective in terms of impact on CO2.

Do let us know at editorial@4thway.co.uk if there are other reliable ways to offset our carbon footprints that you think are even more cost-effective. We're also interested in learning about any high-quality investments that help people offset other aspects of their ecological footprint, such as usage of their share of the world's land and resources, so get in touch if you want.

Lending through Energise Africa (IFISA available)

Targeting poorer countries where the current energy mix is still carbon-heavy produces the best gains for the climate, as it offsets better at a lower cost.

Solar projects through the online lending company Energise Africa can save around two to four tonnes of CO2 per year per £1,000 you invest (or “donate” if your loan turns into a loss). The projects are often replacing off-grid, highly polluting diesel and kerosene in Sub-Saharan Africa.

On that basis, £2,000 to £5,000 will be enough to offset your excess carbon usage, depending largely on how little you use cars, fly, buy stuff and heat your (large or small home). You can estimate better for yourself after using a carbon footprint calculator.

The Energise Africa solar projects tell you their estimates of the CO2 that will be saved, making your job easier.

My rough calculations are that you probably offset about 5 times more CO2 than when lending in a UK-based solar project. It would be more, but a sizeable allowance needs to be made for the fact that in many cases in Africa the solar cells you fund will partly be used to produce extra energy and is therefore not completely replacing existing dirty energy.

Energise Africa borrowers are typically contracted to pay you around 7% on your loans and tens of millions of pounds have been lent through this online lending platform.

Don't feel bad if the price of fully offsetting your excess is currently too high for you. Think of it more as a goal to work towards if you're ever in the position to do so.

But isn't this just the easy way out?

It's drilled into us how important it is to live with a care for the environment – and I think most of us instinctively appreciate that. Certainly we can all still make reductions of some kind at home when we can. And we can stay routinely attentive about playing our part on that.

But this conditioning might make you feel guilty about offsetting to fully neutralise your excess impact on the climate. Shouldn't we just live more responsibly, you might think?

Try to get your carbon equivalents down to your fair share just doing that. Not many will succeed.

Both streamlining your lifestyle and funding solar improve the climate situation. Clean energy increases the world's ability to live more comfortably in a sustainable way, without damaging the planet through greenhouse gases.

There are thousands of external offsetting projects and only one “you” project. It would be a heck of a coincidence if the “you” project happened to be the very best way to do it.

So the chances are that many of those offsetting projects are going to be easier and cheaper, or a more effective use of your time and money for you to produce better results for the environment than the “you” project.

Why not invest in solar on the stock market?

You might be thinking that investing in shares in solar companies is surely just about the same thing?

No.

When companies issue new shares and you buy them, you're helping that company directly by paying it money. You would then be directly supporting your solar or other ecological cause.

But we don't normally invest in shares that way.

When you buy shares through a stock market – which is a much more common way to buy shares – you are merely buying those existing shares from other shareholders. Money changes hands between you and the other parties, and none of it goes to the company itself.

While it's sometimes very slightly more complicated than that, basically you're not helping these business achieve any climate or other ethical goals when you invest through the London Stock Exchange or any other secondary market.

In contrast, by lending directly online, your money is going to fund the actual solar placements and any accompanying CO2 reductions.

 

Visit Energise Africa.

Use the WWF's carbon footprint calculator.

 

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