Investing in a greener world

The scientific community has long been aware that the Earth’s climate has been getting warmer. Despite putting down many markers to world leaders about the dangers of ignoring the warning signs, progress has been slow – not least because the precise cause of the warming phenomenon continues to be a source of debate. Though some people disagree with the assertion that the likeliest cause of climate change is the continual burning of fossil fuels, the majority of scientists working in the field consider this to be the explanation with the most robust evidence base.

To help negate the effects of climate change, there have been many important developments in renewable energy sources. For example, innovative companies have looked to harness solutions that help cut down industrial pollution as well as reduce individual carbon footprints. For this reason, green technology has become as interesting to investors as the traditional investment markets. The potential for reward is twofold: there is the possibility of good returns as well as the knowledge that these types of investments are helping to contribute to creating a greener world.

The increased interest in technological solutions to climate change has seen markets, investors and financial experts start to take an interest in the development of alternative energy sources and low-emissions manufacturing. For example, leading financial advisor Ken Fisher has a deep interest in a greener world, in particular the protection of America’s iconic redwood trees, and is keen to see greater diversity in sustainable investments.

Investing for the future

Reserves of oil and gas are finite, and although there is disagreement over when they will finally run out (even though the oil industry continues to discover new sites), the current reliance on oil derived sources of fuel and energy means that huge quantities of carbon dioxide continue to be pumped into the air. This is not only extremely damaging to the atmosphere and oceans, it is also damaging to people’s health.

Investing in renewables not only gives companies that have developed – or are in the process of developing green initiatives, but also makes a serious contribution to cutting down the use of fossil fuels and shaping a more climate friendly future.

The advance of wind, wave and solar power has revolutionized the sustainable sector and allows innovative investors a wide range of investment choices. The sector has certainly seen a rise in popularity for investments and represents a good opportunity for those looking for somewhere different to place their funds. With the world waking up to the effects of climate change, renewables will be a key part of global economic development, as countries try to work together for the benefit of the planet and its people.

Opportunities for green investing

Fossil fuel costs for companies can be volatile, and many investors are seeking out opportunities for investing in businesses that have reduced their carbon footprint and are less exposed to the liabilities of paying for their carbon emissions. Environmental issues are high up the agenda for many fund managers and there are many organizations that monitor and collect environmental data so that investors can study a company’s carbon footprint as well as the likely returns before committing resources.

Renewable energy now offers many opportunities for investing and, as is the case for any investments, it’s important to consider risk tolerance alongside the desire for a short or long time horizon. Realistically, renewables should generally be considered for the long term as the demand for fossil fuels falls and new technologies and companies emerge to add to those already making a success in the sector.

One low risk option is solar power, and buying into renewable energy bonds as projects such as solar farms continue to be developed open up opportunities to be part of this green investment movement. Returns of 5 per cent or more are possible here, and in some cases it is also possible to buy into other solar projects. Investing in solar Photovoltaic projects, for example, can be profitable as well as low risk as once the solar PV facility is installed there isn’t much that can go wrong with it.

Investing in companies involved in lithium mining may be of interest for those who see the future belonging to the electric car, as most of these are powered by lithium batteries. It’s more risky than solar power and probably not suitable as a short-term investment, but with many electronic devices using these batteries and the potential for a massive expansion in the market, an increased demand for lithium could see it provide good future ROI.

Companies such as Siemens and GE that have large investments in green energy but have also diversified into other areas offer potentially high returns, especially through wind and solar power.

Whatever the investment decision, it’s essential to take sound advice and study the renewables sector in detail before taking the step towards investing for a greener world.


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