If you think that climate disruption and our resulting global response will be the big story of the 21st century, you have to figure that investment markets will eventually start to pick up on who the winners and losers in such a world might be. And if the market as a whole is on the trail of clean, green companies, then the maxim of "buy low, sell high" suggests that savvy long-term investors will want to get there first. Today's Wired News has what will undoubtedly be one of many articles about how to scope out the investment market in a global warming world. It's a good start.
The article doesn't try to define any winners and losers just yet, but does spell out some steps that those of us thinking about how climate disruption will shape markets should keep in mind. Interestingly, these also make for good rules for catching early indicators of which political figures and non-market organizations are best-positioned to become leaders in the years and decades to come.
Wired's rules, paraphrased, are:
The Wired piece notes something in passing that I think is worth drawing attention to: most "socially-responsible" investment funds don't look specifically at global warming issues. And while alternative energy-specific funds are out there, there doesn't appear to be anything akin to a "bright green" mutual fund available, combining alternative energy companies, groups pushing efficiency, and firms that are taking steps to reduce their own greenhouse footprints ahead of the rest. Do any of you know of anyone assembling an investment package like this?
And just yesterday Goldman Sachs announced they would "establish a Center for Environmental Markets to study how the free-market system can solve environmental problems." They have also made a commitment to increase thier involvement with carbon trading and commit their equity research department to work on environmental studies.
As a response to Jamais Cascio's post: 'most "socially-responsible" investment funds don't look specifically at global warming issues,' the new KLD index (http://www.kldclimate100.com)does focus specifically on climate and the companies that are responding.
No it is not "bright green"--to wit BP, GE, and Shell mixed in with the Evergreen Solars, Kyoceras, and SunWays of the world--but it does try to addres "combining alternative energy companies, groups pushing efficiency, and firms that are taking steps to reduce their own greenhouse footprints ahead of the rest."
We threw in the big ones because it's hard to attract large scale investment with only pure plays. And like it or not, GE, BP, and Shell, bring the market power necessary to take alt techs mainstream.
Here are some brighter green fund ideas.
WilderHill Clean Energy Index
New Energy Finance's Global Energy Innovation Index (GEIX)
Impax ET50 Index
Portfolio 21 is a global mutual fund committed to investing in a sustainable future. Companies using sustainability principles as a core part of their business strategies are positioned to prosper in the future and can be more efficient and profitable today. Portfolio 21 concentrates on companies that have made a commitment to environmental sustainability and have demonstrated this commitment through their business strategies, practices and investments. Companies are beginning to understand the competitive advantage of sustainability. You might enjoy taking a look at the list of companies in the fund which can be found at www.Portfolio21.com
My main problem with investing in green shares is that it's difficult to know whether it's really possible for a large number of these companies to make money in the near future.
How much investment in green companies is actually a very long term bet?
The difference is important because markets don't work long-term, government regulation is required (e.g. Kyoto and successors) and this we know is difficult to predict!