Within the world of ethical investment, low carbon is king.
This field of investment focuses on renewable energy, sustainable practices, and zero-carbon alternatives in general. Low carbon investments have included electronic cars, solar panels, and wind power. These inventions – now commonplace – are to be found in every vision of a future utopia. It’s immediately obvious why low carbon investments are both ethical and lucrative.
What is “low carbon” investing?
What’s not so obvious is how diverse the options for low carbon investing can be. With an aim as broad as confronting climate change come broad investment opportunities to match, ranging from bacterial energy to carbon offsetting.
A climate-friendly, low carbon index can include a range of things from developing low carbon products to simply contributing to carbon reduction through waste reduction or resource efficiency. Low carbon indices like the FTSE4Good Index look to invest in companies that fulfil climate-friendly criteria; a quick look will tell you whether the investment you’re considering is low carbon.
How can I invest?
Because environmental ethical investment – and low carbon investing in particular – has been at the forefront of ethical investing for so long, it’s easy to find an index that covers it.
As an investor, you might have a particular sector of the low carbon investment market in mind; don’t worry, there are funds out there just as discerning as you. You can ask an expert if you like, but here are the details on a few of your options:
A basic way to ensure you’re involved in low carbon investment is to choose any sustainable or “green” fund or index. Most of these funds use a negative screen to find appropriate investment opportunities: this means they simply include companies that do not contribute heavily to carbon emissions. You can look into things like the FTSE4Good and Dow Jones Sustainability indices, or ask your broker to ensure that your investments match a green label – they’ll all cover low carbon investment!
Instead of screening out the bad, a “positively screened” ethical fund only includes companies that match its ethical ideals. For those with an interest or passion in contributing more actively to a low carbon economy there are several possibilities:
- The WHEB Sustainability Fund use a positive screen to include only sectors that offer actual social and environmental benefit, instead of neutrality alone.
- The UK Growth Fund takes a holistic approach. It focuses on long term and consistent returns on investment, and all companies in the fund are required to meet its social and environmental conditions.
- The Jupiter Ecology Fund is exceptionally dedicated to the power of low carbon investment. It invests in companies that not only meet its strict social and environmental ethical standards, but which also produce solutions to these environmental concerns. It’s been noted to be a particularly strongly performing fund.
- Green bonds could be the way to go for shorter-term low carbon investments. These bonds are used to fund environmentally beneficial initiatives, and are borrowed at a fixed rate so there’s very little risk.
Is low carbon still a relevant investment?
Originating decades ago, environmental ethics has lead the field in ethical investment for a long time; and low carbon investment is one of its cornerstones. Originally a niche market because “green” funds weren’t supposed to perform well, low carbon technology and developments have turned into an industry worth billions annually.
Low carbon investment is not only diverse, with funds in all shades of green, its also one of the few investment fields that is integral to every major economy on the planet.
With climate change summits pressing on companies and countries more each year, the demand for low carbon developments is only going to increase. Low carbon investments, like Earth, are as hot as ever. In 2014, clean energy investment rose 16% to US$310 billion worldwide – and its still climbing.
Whether it’s out of the goodness of their hearts or international agreements, many countries are seeking to become low carbon or carbon neutral economies. A low carbon economy is when all infrastructure of a nation incorporates low or zero carbon initiatives, with the aim of mitigating climate change on a national level.
The increase in countries aiming to reduce emissions nation-wide is fantastic news for the low carbon investor: increased demand for current technologies means an upswing in the value of current stock, and creates a market for future, competing technologies – you could be part of bringing this future about faster.
If you’d like to know more about your options for low carbon investment, of it you’d like us to guide you through the whole process, please get in touch.