You’re taking care to lessen your environmental impact of every aspect of your personal and professional lives — if you’re considering trading, you might be wondering how that stands up.
Trading hasn’t faced as much scrutiny from the green movement as other parts of the finance world, but that doesn’t mean that trading has no environmental implications.
Consider the fact that the majority of trading relies heavily on the internet. The idea that most people have of trading involving men in trading pits is no longer accurate. The stock market now mostly trades inside black boxes, through people like a forex broker.
This reliance on technology means that trading contributes to the huge impact on the environment that the internet can cause, mostly through its huge use of energy.
How the growing global digital infrastructure is built and powered is becoming central to the question of whether we will be able to move to renewable energy in time to avoid more dangerous climate change.
Particular kinds of trading also have specific implications for the environment. For example, some forms of high-frequency trading, usually those that rely on split-second responses to market moves, required specialised fibre-optic cables running in a straight route. This means drilling through landscapes and under the sea.
What about Cryptocurrency?
Cryptocurrency trading also has the potential to have a very significant impact on the environment due to the processing-heavy nature of the blockchain technology that underpins it.
The Bitcoin network now consumes more energy than Switzerland and the Czech Republic. Ethereum has recently changed the way it works in order to reduce its use of energy so is a little better in this regard.
Blockchain and other related technologies need to take society in a direction that is both more inclusive and greener. The environmental implications of trading mostly concerns its infrastructure, so responsibility for making trading more environmentally friendly lies mostly with the financial institutions themselves, as well as technology companies, regulators, and governments.
There are some things that individual traders can do to help, however. It’s likely to be a good idea to avoid Bitcoin, for example, as it has a history of severe fluctuations in value as well as its high use of energy.
A trade can also choose to use internet-related businesses in the course of their trading work that has a better environmental footprint.
Greenpeace created a Clicking Green report to help with these decisions. Apple and Google both get an A grade from this report. Apple, in particular, was praised for making sure its data centres are entirely run on energy that is renewable. It also locates these centres in cold environments, so that they can feed the heat generated into local heating systems. Amazon gets a C from Clicking Green, due to a lack of transparency about their green methods.
Traders can also choose to invest in assets that are inherently environmentally friendly. A good example of this are the ethical investment options by Triodos, supporting social, environmental or cultural change.
Image credits: Christian Wiediger, Annie Spratt, Austin Distel — thank you.