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ENVIRONMENT-US: Investors Warm to Greener Pastures

Brian D. Pellot

NEW YORK, Jun 13 2007 (IPS) - Greed may not be the only factor driving U.S. investors’ financial decisions.

According to an Opinion Research Corporation survey released Wednesday by Calvert, one of the nation’s largest socially responsible mutual fund firms, more investors are considering a different shade of green when investing their money.

Calvert’s Climate Change/Alternative Energy Survey, which queried 1,094 U.S. investors, reveals that 76 percent are concerned about global warming and the implications of climate change.

Eighty-five percent of those polled agree that alternative energy investments represent a dual opportunity to support the environment while earning a profit. So why have only one in five investors discussed this issue with their financial advisors?

“People are just starting to see the move toward alternative energy at the individual level,” said Tim Juliani, Markets and Business Strategy Fellow for the Pew Centre on Global Climate Change. “What’s really going to pull these technologies into the marketplace is a federal cap and trade system.”

Such a system, advocated by groups like the U.S. Climate Action Partnership, urges the federal government to slash greenhouse gas emissions and to create business incentives for doing so.

Although Juliani and others believe that climate change should be a non-partisan issue, Calvert’s survey reveals a decidedly different result.

Just 59 percent of investors surveyed who identified themselves as Republicans are concerned about the impact of climate change, compared to 92 percent of Democrats and 76 percent of Independents.

Despite this relatively large share of nay-sayers, 79 percent of Republicans think that there should be more opportunities made available to investors who want to invest in mutual funds with a clear focus on alternative energy, compared to 91 percent of Democrats and 82 percent of independents.

The survey also reports that 86 percent of women are concerned about global warming compared to 68 percent of men. Additionally, 92 percent of investors aged 25-34 would like to see more alternative energy investment opportunities.

“There is a complex range of societal, social, behavioural and investment issues in this type of result,” said Paul Clements-Hunt, head of unit at the U.N. Environment Programme Finance Initiative, a global partnership with the private sector to better understand the impacts of environmental and social considerations on financial performance.

“This marks the beginning in a spike of intergenerational concerns in climate change,” he said.

Steve Falci, chief investment officer of equities at Calvert, said at a news conference Wednesday that, “A strong majority of U.S. investors are worried about climate change and are interested in alternative energy investments but are still looking for vehicles to invest in.”

Advisors at Calvert believe that their recently established Global Alternative Energy Fund may be the perfect vehicle to carry socially responsible investors to financial rewards in the near future.

Jens Peers, lead portfolio manager of Calvert’s new fund, estimates that the Global Alternative Energy Fund’s capacity will approach 2 billion dollars within a few years. As a point of reference, he added that China has committed 100 billion dollars through 2020 in renewable energy investments.

Peers predicts “tremendous growth in developing alternative energy in the next few years” due especially to “tough [environmental] targets” set by specific U.S. states such as California and members of the Group of Eight most industrialised countries.

At the G8 summit in Germany last week, major polluters, including the U.S., agreed to “consider” reducing emissions by 50 percent by 2050. Developing innovative renewable energy sources could help polluting countries and industries reach this goal, but several climate and financial experts warn investors to remain cautious.

“Investors should always do their research on any type of investment and know that certain things will and will not work out over time,” Juliani said.

“Any new technology has to prove itself in the marketplace,” Clements-Hunt added. “Just because it’s a clean technology doesn’t mean it should be in its own category.”

Calvert’s Global Alternative Energy Fund will invest in traditional forms of renewable energy like solar and wind, but will also dip into innovative energy sources such as wave technology and geothermal power if they are quoted.

The mutual fund firm has already identified upwards of 150 companies in which they hope to invest, and says that after tracking most of these stocks for the past five years, a majority have more than doubled in price.

“With increasing oil prices, we see enormous growth in this sector. Last year alone, the sector was up 50 percent,” Peers said.

The Global Alternative Energy Fund will devote 80 percent of its funds to companies that derive at least half of their revenues from sales related to alternative energy and 20 percent of funds to “market leaders” in specific technologies that derive 10 percent of revenues from this form of energy.

“Our goal here is to meet the growing investor demand for alternative energy, both as a global investing opportunity and as an essential response to climate change,” Falci said.

“This is about solutions to the climate change crisis,” added Lily Dodge, senior research analyst for Calvert. “To start a conversation about the marketplace presenting solutions is something we really want to drive home.”