LITA.co launches Transformation, a new investment offer aimed at fighting global warming, to invest directly in the transition of all companies commited to becoming climate neutral.
Why this new investment offer?
Because there is an urgent need to guide all private sector companies in their transition. And because we need to act now! The last two parts of the 6th IPCC assessment report confirm that global warming and the resulting extreme weather events are already causing irreversible damage to nature and humans, and especially to those who are most vulnerable (April 2021). It is therefore crucial that we initiate a profound transformation now to limit the extent and pace of climate change. We have only three years left to reduce greenhouse gas emissions and preserve a livable planet.
According to IPCC experts, current funding streams are inadequate and need to increase 3 to 6 times to finance the ecological transition at a global level. The good news: there is plenty of capital and liquidity, they are just poorly distributed.
Accelerating the transition to make impact the norm
Right from the start of LITA.co, we have been able to use crowdfunding on our own scale to help fund enterprises that are committed to fighting global warming and social inequality. Our values have led us to contribute to a pioneering economy in which social and environmental benefits are central. We are well aware that these stakeholders represent only a small part (though a growing one) of all economic activity. Within the European Union, 22.6 million SMEs employ 84 million people. If we really want to put the economy on this ambitious but right track, we must also participate in financing companies in the conventional economy that want to transform now. To be able to act now, we have created a new financing offer specifically aimed at polluting SMEs, to support them in their transformation.
This offer aims to support companies in adopting an austerity model to reduce their negative impact. Our aim is to give them the opportunity to make a positive contribution to the planet, nature, biodiversity and society.
"Is it wrong to think we need to ensure true austerity and a devolution of capital, but that we also need innovation and investment to make our economies climate-neutral?" "Une économie à nous", Eva Sadoun, co-founder of LITA.co.
A new innovative financial product that calls to action
In order tochange the economy, the financial sector needs to be changed.Since the beginning of LITA.co, our guiding principle has been to put profitability in function of impact and not the other way around. Ethical finance should not only be supportive, transparent and inclusive, but also undeniably a driver for change. This is why we propose a new financial product: green bonds with a significant impact premium. On the one hand, these bonds offer a fair return, with an annual interest rate calculated based on the creditworthiness of the committed company, but deliberately set below the market price to encourage it to invest in its transformation. On the other hand, as compensation for the investor, the impact premium will mainly serve as a punishment for the polluting company if they fail to achieve their transformation goals. The premium, which is directly linked to an impact indicator, forces the company to achieve the predetermined goals.
To be qualified for this funding, transformation targets must:
- be indexed according to the global-level carbon footprint across the value chain.
- be aligned to a 1.5 degree trajectory and prioritise the steps to reduce carbon emissions: avoid, reduce, compensate.
- show commitment by exceeding current environmental regulations.
- be measurable and verifiable by a competent third party. This is how we ensure transparency and fairness.
The IPCC is very clear in its latest report: acting will cost us less than doing nothing. Moreover, Luis de Guindos, vice-president of the European Central Bank has already said, "The short-term costs of transition are insignificant compared to the medium- and long-term costs of uncontrolled climate change". It will take time for the big financial players to adapt, but citizens can act now and contribute to the development of a sustainable economy with LITA.co. Whatever happens, climate neutrality will undoubtedly require concerted action by governments, society and the private sector, with a hefty dose of political courage. Discover the investment opportunities of this new offer here, to help transform conventional companies.