Renewable energy funds are on the rise, seeking to match profits with a commitment to sustainability. These funds invest not only in generators of solar and wind power and their suppliers, but also in manufacturers of LED light bulbs, electric cars and automobile batteries.
Stock mutual funds and exchange-traded funds (ETFs) are jumping on the bandwagon—from big players like Fidelity Investments and its Select Environment and Alternative Energy Portfolio to smaller ones that have been at it for decades, such as the New Alternatives Fund.
The fact that major companies like Facebook, with its pledge to power global operations with 100 percent renewable energy by 2020, are going in big for renewables sweetens the financial prospect for investors.
As such, large utilities like NextEra Energy and MidAmerican Energy are making huge investments in renewables. James L. Robo, CEO of NextEra Energy, one of the country’s largest power generators, predicted that solar and wind power will be cheaper than coal or nuclear generation by the beginning of the next decade. MidAmerican Energy, the majority of which is owned by billionaire investor Warren Buffet’s holding company, Berkshire Hathaway, has set its sights on getting 100 percent of its electricity from wind power by 2020.
With the recent report by a United Nations scientific panel calling for immediate action to reduce greenhouse gas emissions, demand for renewable energy may continue to surge—and with it investment in renewable technologies.
Further, studies from Morningstar and others have shown that including nonfinancial factors, like environmental performance, in investment management is healthy for overall returns.
The fund's mandate “is to make as much money as possible investing in solutions for dealing with climate change," White said—noting that he expects rising demand for renewable energy to make investments in the sector even more lucrative. "We are trying to figure out how to profit from the activity in this area, which we expect to ramp up considerably.”
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Based in southwest Florida, Amy has written about sustainability and the Triple Bottom Line for over 20 years, specializing in sustainability reporting, policy papers and research reports for multinational clients in pharmaceuticals, consumer goods, ICT, tourism and other sectors. She also writes for Ethical Corporation and is a contributor to Creating a Culture of Integrity: Business Ethics for the 21st Century. Connect with Amy on LinkedIn.