How can you know if you’re making a positive impact? 

This is a great question and one I wish we were asked more often. 

As investors, we rely on financial metrics when making decisions and evaluating performance. But we rarely apply the same level of scrutiny when evaluating the effect that those investment decisions have on people and planet. Part of that is because we’re not always well equipped to do so. 

Every investment has impact, positive and negative, but identifying all relevant impact metrics and consistently tracking performance can be complicated and costly.

So how do we strike that balance between rigour and pragmatism? And crucially, how can we tell the difference between “green” and “greenwashed” (tweet this)?  It’s easy to slap buzzwords on a product -- it’s hard to make and measure real change.

At CoPower, our philosophy is keep it simple, measure what matters.

Tracking and reporting on a few key environmental performance indicators not only enables investors to hold us accountable to our promise of financial & environmental returns, but helps us make focussed and more informed investment decisions. We don’t measure everything -- but we strive for transparency and continual improvement. So, in that spirit:   

When we talk about impact, here’s exactly what that means and how we’re calculating it. 

Impact metrics are integrated into our online platform so that potential investors can review projected  kWh of clean energy generated or energy saved and resulting CO2 emissions reductions, for each product and project. Once invested, they can track the actual impact performance of their investment on a quarterly basis to see how it measures up.

To make this happen we start with standard carbon accounting methodology. The numbers vary with different locations and technologies, but, overall it’s a simple process. 

1. Calculate the total impact of each project:

a.     For solar, we use clean energy generation projections over 5 years as determined by models like PVSyst, the industry standard. We then check this against actual monthly solar production for our projects as reported by on-site monitoring systems and the utility companies. This value fluctuates month to month (usually highest in the summer when there is more daylight).

b.     For efficiency we use projections of how much electricity and natural gas will be saved by the retrofit. Sometimes this is simple (changing a 100W bulb for a 5W bulb), and sometimes more complex requiring an independent engineering report. We also convert this to a $-value to estimate the energy savings to the building manager over the lifetime of the upgraded equipment.

2. Convert clean energy to carbon emissions avoided:

a.     We use a conversion factor from Environment Canada’s National Greenhouse Gas Inventory Report.

b.     For electricity in Ontario, we use  0.08  kg CO2e /  kWh (electricity) [for every 1 kWh of electricity produced in ON, there is an average of 0.08 kg of CO2-e.] CO2-e means carbon dioxide equivalent, and is a standard way of reporting the carbon footprint of multiple greenhouse gases, for example, carbon, methane, in terms of CO2.

c.     For natural gas in Ontario, we use 1.0906 kgC02e/m3 of natural gas.

d.   These factors vary by province because of the types of power production in different provinces

3.     Allocate the relative amount of impact to the bonds:

a.     Each bond issuance is backed by a diversified mix of projects that can include different technology types ie. LED retrofits, solar PV, geoexchange, biomass or wind, in different locations. We calculate the total impact of the issuance by determining the relative percentages of each project loan outstanding.

b.     For each project, we calculate how much of the total impact should go to bondholders. For this we calculate the percentage of the bond by the value of the total project.

c.   We can then calculate the impact achieved by the total Green Bond issuance, and allocate the appropriate amount for the number of units that you own!


Tags : green investing Canada - Green bonds - Impact investing canada - Ethical funds, sustainable consumption - Capitalism 2.0