Smart Investors target carbon tax opportunities
Opportunities
The move is on to a global clean energy economy. Our re-insurers, superannuation funds and smart investors are beginning to realise this is the case. In 2010 clean energy investments hit record levels globally at $243 billion(1). The EU and China are leading the charge with renewable energy and energy efficiency investment expected to grow between $180 -260 billion pa to 2030 (Bloomberg). Australian investment is lagging behind the rest of the world.
Regional boost from renewable energy
The Climate Institute commissioned leading energy and industry specialists to model the opportunities and to talk to regional business and community leaders, to not only see what extra opportunities exist but to see what else is necessary to turn this opportunity into reality. This research is from Sinclair Knight Merz-MMA and Ernst & Young titled Clean Energy Jobs: Regional Australia.
This recently released research shows the largely untapped energy resources that Australia has in geothermal, large-scale solar, bio-energy, hydro, wind and natural gas. The modelling shows that by 2030, close to 43 per cent of Australia’s electricity could be produced from clean energy, up from around 12 per cent today. Regional analysis shows that greater proportions of renewable electricity are attainable with extra policies and focus.
“The smart investor mitigates their investment risk by selecting companies and investments that are actively addressing their carbon use and climate change risks,” said Louise Edkins, a Brisbane based director of Ethical Investment Advisers Pty Ltd (AFSL 276544).
Being an ethical investment specialist for over 17 years, Louise has found that many of her investors have benefited from the investment performance of companies with sustainable practices.
Investment opportunities
There are many listed companies that are actively reducing their carbon footprint and addressing carbon risk. A few examples of these companies are highlighted below:
“QBE Insurance is a signatory to ClimateWise in Europe, which provides a framework for insurance companies to build climate change into their business operations. They also participate in US NAIC Insurer Climate Risk disclosure each year,” said Karen McLeod, Authorised Representative at Ethical Investment Advisers Pty Ltd.
Karen McLeod also cites smaller companies like Blackmores who take carbon risk seriously. “The company’s headquarters, opened in 2009 has a carbon footprint one eighth of that of a comparable development, along with a range of additional environmental features. In addition they actively reduce product packaging and have an LPG vehicles fleet.”
It will be increasingly important for all companies to proactively address their carbon footprint. As the Responsible Investment Association Australasia (RIAA) states, “… almost every industry will be affected by climate change. Carbon efficiency will become an important component of economic efficiency and productivity. Many ways of making money today won’t be profitable tomorrow. In the automotive and aluminum industries, for instance, up to 65% of their value could be at risk if they fail to find ways to reduce their emissions and energy usage. Just as responsible investors want to be ahead of the curve in investing in clean technology, they want to avoid investing in companies that are not taking sensible, strategic moves toward energy efficiency.”
Investment risk
There are certainly a number of companies that stand to suffer reduced valuations in a low carbon environment. Deutsche Bank analysts recently reported that the hardest hit companies, in terms of net present value, will be Virgin Blue, Caltex and Alumina. BlueScope Steel, Qantas, Origin and OneSteel are also high on the list.
Karen McLeod of Ethical Investment Advisers believes that all prudent investors should review their portfolios in light of the changing carbon environment. “Smart investors need their portfolios to be future ready”.
Interested investors can find out more about ethical investing and climate change at our talk next week.
Talk on Ethical Shares
6:00 pm – 7:30pm Tuesday, 7th June 2011
Brisbane Workers' Club
Cnr Given Terrace and Latrobe Terrace, Paddington Qld 4064
RSVPs for the seminar can be sent to Karen McLeod: kmcleod@ethicalinvestment.com.au, or by phoning 07 3333 2187.
(1) Mercer - Climate Change Report February 2011
Karen McLeod and Louise Edkins, CFP®, are Authorised Representatives of Ethical Investment Advisers (AFSL 276544).
Ethical Investment Advisers (AFSL 276544) has been certified by RIAA according to the strict disclosure practices required under the Responsible Investment Certification Program. See www.responsibleinvestment.org for details. CFP®, CERTIFIED FINANCIAL PLANNER TM and are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. Financial Planning Association of Australia Limited is the marks licensing authority for the CFP Marks in Australia, through agreement with FPSB. The contents of this article are intended as general advice only. No specific person’s circumstances, financial situation or objectives have been taken into consideration. You should not act on the information provided without seeking personal advice from an appropriately qualified financial planner. Information included from third parties has been reproduced with their permission. While the source has been verified as reliable, the actual content has not been checked for accuracy. Consequently Ethical Investment Advisers does not warrant the accuracy of the information nor accept liability for any errors in the data.