Exploring the Potential of Environmental Impact Investing for Sustainable Development: The Cases of Dominion Energy and Tesla Motors

Abstract

The health of our planet and the existence of our species faces an uncertain future. Climate change is the single largest issue facing society today, as carbon-based fuel and combustion engines have driven development in nearly every industry. Public investment through securities markets have enabled corporations to extract coal and oil, build combustion engines, and distribute fuel commercially for over one hundred and fifty years. However, it is now widely accepted that if business-as-usual continues, carbon emissions will cause irreversible and devastating effects to the environment and humankind. International, national, local governments, companies, and general populations have taken steps to combat the existential threat of climate change. Divestment in fossil fuel can come both from market mechanics encouraging investment in alternatives, as well as strategic decisions by corporations to make a change. Offering investors financial vehicles to promote sustainable development will improve the capacity of our world to have a more sustainable future, as well as offer investors competitive returns that are not subject to liabilities expected to continue in the fossil fuel industries. This research describes a quantitative additive preference model based on environmental criteria to analyze both Dominion Energy and Tesla Motors through the lens of environmental impact investing utility. The purpose of the model is to quantify the potential environmental impact of individual companies to inform institutional and retail investment decisions geared at environmentally conscious investing. Future work should focus on refining the criteria and weights, integrating the model into a fund-management toolkit, and providing greater transparency for all investors to make positive environmentally impactful investment decisions

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