Investing in Climate Change

Investing in Climate Change

Wildfires are raging through California, which you don’t expect in November.  The Camp Fire outside of Chico has laid waste to the town of Paradise, home to 27,000 people[1].  Where are they going?  Who’s going to pay them to rebuild or relocate?  These fires are the latest in what’s become a yearly devastation caused by California’s seven-year drought.

What’s causing the drought?  The same thing that’s causing the barrage of hurricanes hitting the Southeastern US and Texas.  According to 97% of climate scientists, its climate change caused by greenhouse gasses. (GHG) The scientific consensus is that the climate is changing in a large part due to human activity and it’s largely irreversible[2].

And it’s not just hurricanes and wildfires.  Flooding and other natural disasters impact over 500 million people in India[3].  Even earthquakes are influenced by global warming (GW).  As the ice melts and the seas rise, the one half of the world’s population that lives within 35 miles of the ocean will be affected[4].

This isn’t the first time the Earth has experienced some form of global climate change.  Over the last 650,000 years there have been seven cycles of glacial advancement or retreat[5].  It used to be small variations in the earth’s orbit that changed the amount of solar energy the earth received.  But this time it’s undeniable that human activity has caused massive melting of the ice sheets and the corresponding rise in sea levels.  The amount of ice melting in Greenland and Antarctica is equal in size to Alaska and Texas combined.[6]

Oddly, only 45% of Americans think global warming will affect them.[7]  They think it’s something that will happen in a century so why worry?  Tell that to the people in Paradise or Florida and South Carolina. Investors are a different breed than average Americans however, and 81% of them think they are being affected by climate change now.[8]  They are looking for ways to take advantage of the worldwide situation.  The Economist magazine estimates private investors will lose $4.2 trillion between now and 2100 due to a warming planet.  Best to be prepared.

What’s the best approach for an investor to take?  For starters, look to invest in companies that aren’t contributing to climate change and the economic change that comes with it.  And it’s not just my advice.  Investors with $800 billion in assets are shifting into climate friendly investments such as wind and solar and they’re making a lot of money[9].  The best part of this type of investing is you do good for the planet at the same time you do well for yourself.

Like anything else, climate change has things you want to invest in and things you want to avoid.  On the positive side, investment in renewable energy will reach $5.1 trillion by 2030[10].  Solar power is on top of the list.  The sun isn’t going anywhere for 5 billion years and there are wonderful investments to be made.  Solar Panel manufacturers are going great and they will only improve as California requires all new homes to have some solar power starting in 2020.  Companies that produce inverters that both store and transmit solar energy have a really bright future also.

Water stocks pay a solid dividend and are a good way to invest in a drought or the water fight disputes in places like Florida and Georgia.  Nothing on earth is as necessary as water.  Regular readers know I am a believer in Index Funds and ETFs.  Water and all the other segments of climate change have good ones available.

The largest source of GHG are internal combustion engines and the auto industry knows it’s only a matter of time until Electric Vehicles (EV) take over.  Already, countries like Norway have over 50% EVs or Hybrids on the road[11]. I saw a Telsa Model 3 last week and 30 people were standing just looking at it. The price of gasoline can only go up over time.  So astute drivers are looking for ways to reduce fuel costs.  What’s better than re-charging your battery overnight?

Then there are the companies you really have to look at closely.  Insurance companies have always been solid investments, but now?  Shipping companies pay great dividends, but it’s going to be a lot harder getting from place to place. I like REITs for their 8%+ dividends, but where are their properties?  Oil companies don’t look as attractive in an EV world.  Oh, and stay away from winter sports equipment companies too.

As always, stay protected and give me a call for a list of stocks for the climate change world.

 

Until the next time, we’ll watch you’re money.

 

 

Nicholas W. Bertell ChFC®, AIF®

Financial Advisor / Accredited Investment Fiduciary®

 

Redwood Coast Financial Partners, an independent firm with securities offered through Summit Brokerage Services Inc., member FINRA/SIPC.  Advisory Services offered Through Summit Financial Group Inc., a Registered Investment Advisor.  Advisory services also offered separately through Redwood Coast Financial Partners, a Registered Investment Advisor. Opinions expressed are those of Redwood Coast Financial Partners, and are not endorsed by Summit Brokerage Services, Inc. or its affiliates. All information herein has been prepared solely for information purposes, and is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy.

 

[1] abc7news, Maps: A look at the Camp Fire in Butte County and other California fires

[2] Wikipedia, Climate Change

[3] Global Majority e-journal, Climate Change and Natural Disasters in India and Brazil, Joseph Bisaccia, December 2017

[4] Scienceblog, How many People Live Near the Ocean

[5] NASA, Global Climate Change: How do we know

 

[6] Wikipedia, Climate Change

[7] The Verge, About half of Americans don’t think climate change will affect them, Alessandra Potenza, march 29, 2018

[8] The Atlantic, The Investor’s Guide to Climate Change

[9] ibid

[10] Wealth Management, Risks and Opportunities of Climate Change, Lily Trager, pril 23, 2018

[11] ibid

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