Investing in Climate Change

Both WorldChanging and Spinneyhead take note of this article from Wired on the investment risks and opportunities produced by corporate action on climate change. Jamais provides a helpful overview of the “rules” presented in the article that investors want to keep in mind as they figure global warming into their strategy:

  • Know the science — understanding the science of environmental change puts you in a better position to see who’s working hard and who’s just greenwashing;
  • Know who’s transparent about risks — just because a company isn’t admitting to risks doesn’t mean that they aren’t there. Companies willing to acknowledge the ways in which global warming puts them at risk are more likely to be working for real change;
  • Know who’s already investing in environmental responsibility — you won’t be the only one ahead of the game, and it’s good to pay attention to who else is paying attention;
  • Know who’s already working to reduce their greenhouse gas footprint — being the “first mover” isn’t always an advantage, but it’s a wise strategy in a scenario where the risks are great and the likelihood of those risks appearing is even greater;
  • Know what trade-offs you’re willing to make — nobody’s perfect, and (as is so often true) the best can be the enemy of the good. Waiting for the perfect environmental champion to come along will mean missing out on some good investments in companies that learn from their mistakes.
  • I’ve discussed renewable energy investment several times recently, and I still think there’s promise in this sector for the investor who’s careful about “can’t miss” opportunities (I imagine we’ll hear about lots of these). Climate change presents a very different kind of opportunity: one can spread their funds across a variety of sectors by using corporate action, rather than goods produced or services offered, as a yardstick.

    One comment
    Leave a Reply

    Your email address will not be published. Required fields are marked *