As one of the most potent existential threats to humanity, climate change has certainly made more than a few political leaders and scientists around the world nervous. The fact that fossil fuel companies are some of the largest corporate forces in the world has only slowed down efforts to halt climate change, so it seems as though it is not a problem which will go away any time soon.
However, hope is not lost, as more and more green energy companies and responsible companies are appearing. Here are some of the ways climate change may influence the investment world.
Technology Companies
As climate change has slowly crept up like a predator at humanity’s heels, innovation has also been bolstered, and there are now thousands of technology companies who are working to make the world a better place (as well as make a profit).
As such, the investment options have changed considerably, and it is now possible to invest in potentially very profitable, green technology companies. As the demand for renewable energy increases, for instance, so too will the demand for renewable energy technologies, and this is already forcing major energy giants to adapt.
Impact Investing
Given that climate change is such a prominent issue, there have been ripples in the investment world as investors turn to new strategies which have conscience, as well as profit, at the heart of them.
Millennials are spearheading a $9 trillion change in investing by turning to strategies like impact investing. This involves investing in companies, funds and organisations which have a positive impact on society and the environment, thereby boosting their funding and maximising their potential to prosper.
Investment Firms
It is worth noting that major investment firms, like Wellington Management, are also adapting their investment strategies to better represent the current conditions the world faces. They recently partnered with Woods Hole Research Centre to study climate change, an innovative step which could help to boost climate change awareness.
If more investment firms follow suit, then it could mark a major shift in investor behaviour, given that some investors may follow and adopt the strategies used by such firms. This would also help to boost the funding and profit potential of green/responsible companies, increasing their power and influence in the corporate world.
A Long Way to Go
With that being said, there is undoubtedly a lot of ground which needs to be made for the investment world to be fully mindful of climate change. Large fossil fuel based companies continue to profit, and there are plenty of investors whose sole motivation is making money, whatever the social/environmental cost.
However, it is clear that the green investment movement is well and truly in swing, and it could only be a matter of time before strategies like impact investing become the norm.
Ultimately, climate change is beginning to influence investor behaviour, and many investment portfolios are likely to include greener companies. As such, the future is bright, and it shouldn’t be long before investors across the world are pursuing more responsible investment strategies with regards to climate change.