Just how large is the green investment space? Well, it’s large, and it’s growing rapidly. For example, the FTSE4Good, which is a sub‐index of London’s FTSE, has the largest market capitalization of any of the green equity indices. At the end of May 2017, the global FTSE4Good’s market capitalization stood at a whopping $20.9 trillion. That’s somewhat larger than the current GDP of the United States &mdashl $19.0 trillion.
With investors favoring green, and investment flows being earmarked as green, an obvious question arises: “How does an investment qualify for the coveted green designation?” The current methods used to measure green and qualify an investment as “green” fail to meet rudimentary standards of measurement. The most basic principal of measurement is replication. But, the current methods are, for the most part, subjective and opaque. They are “black boxes,” yielding results that can’t be replicated. This leaves a multi‐trillion dollar green investment house wobbling on stilts, rather than a sound foundation.
In order to firm up the green investment house’s foundation, Dr. Heinz Schimmelbusch, Founder & CEO of the Advanced Metallurgical Group (where I am a member of the Supervisory Board), and I have developed a methodology that is simple, transparent, and replicable. Our metric is determined by starting at the origin of the supply chain. It is from that starting point that we measure the amount of greenness ultimately enabled by the production of a so‐called green enabler.