Responsible Investor

Going Green – the investment opportunities

Theme of the month: Finding the new industries that will profit from the drive to a better environment.

Widespread awakening to the relevant global issues has now shifted the argument from whether the planet is undergoing detrimental environmental change to which direct measures need to be taken to address the problem. Doing nothing is no longer a viable option.
Geopolitically, the most stubborn longstanding opponent of developing a coordinated worldwide solution was the United States, but now even the Government there has finally conceded that action is necessary. Meanwhile, countries such as China acknowledge they have a problem which needs to be tackled, particularly relating to clean water provision, since the apparent extinction this year of one of their Olympics 2008 mascots, the Yangtze Freshwater Dolphin.
The sheer size, global scope and accelerating pace of the already identified changes will create a slew of major new industries over the next decade or two. Significant financial opportunities will arise from the new companies that emerge to develop profitable innovative solutions to the challenges ahead and therefore in due course become worldwide household names.

For the first time in history such emerging green companies and sectors will have a widespread global impetus behind them given that climate change is now placed firmly at the centre of political and business agendas alike, with developments such as the Stern Review and commercial carbon cap and trading obligations. The resultant financial resources made available to these firms, whether through investment, subsidy or regulatory obligation-led demand creation, allied to the size of the problems should underwrite a long phase of worldwide structural growth.
Previously, emergent technologically based industries, such as semiconductors or biotechnology, were historically far more geographically constrained in their applications and were purely commercially led whilst having a variety of embedded competing sectors to overcome before they matured into well-established, large industries.
The same cannot be said for the new emerging green sectors – here the massive upswell in awareness of and determination to counteract climate change shows no signs of abating and is actually increasing all the time.

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