Climate Change – What Can Investors Do To Help?
Climate change is perhaps the greatest crisis humanity has ever faced.
Confronted with forces that could make the planet uninhabitable, it’s easy to become paralysed and revert to inaction, to see the situation as one you can’t change.
But investors have a great deal of power in modern society, and with that power comes the opportunity to protect the world we live in.
Ethical Investment
The most obvious way in which investors can make a difference is through ethical investment.
Investing in a greener future takes two forms – avoiding companies that harm the environment and putting money into those that will benefit it.
Obvious examples of the first principle would be not investing in oil companies or power providers that make heavy use of coal.
For the second, it can mean investment in renewable energy, electric vehicles, or something simpler like insulation, which cuts down on power use by home owners.
This sort of investing has traditionally been scorned by some as a fool’s errand that undermines your chance for profit.
But the growing success of eco-friendly companies means that doing good is now entirely compatible with good returns.
High profile companies like Tesla have made eco-friendly projects look practical and so raised the value of green stocks.
Doing this sort of investment directly can be complicated, as there’s a lot of research to be done on the environmental impact of companies.
Fortunately, the internet is your friend, as environmental campaigning groups are keen to draw attention to both the harms and the good works that companies do.
Alternatively, there are a growing number of green funds through which you can make environmental investments with less legwork.
However you make your green investments, keep an eye out for companies that are only putting on a show rather than making substantial change.
In an age when environmental harm is widely condemned, many companies are undertaking greenwashing publicity exercises to try to get them off the hook.
Philanthropy
If you have the money to spare then philanthropic action can be a huge help.
Donations to environmental charities and campaign groups can help them in both carrying out their campaigns and publicising their work, increasing public awareness of environmental issues.
When you’re looking for charities to support, it’s easy to become focused on what’s close to home.
But climate change is both affected by and more acutely felt by people in the developing world.
Consider giving to projects that will help people cope with the effects of climate change as well as those that will help to stop it.
Work that alters the direction of economies before they become as polluting as the west may be particularly important in the long run.
Put Pressure on Companies
As an investor, you are in a position to shift the way companies behave, not just through who you invest in but through how you interact with them.
If you’re invested in a company that could be better at environmental responsibility, let the company’s leaders know.
Use your position as a shareholder. Write letters. Turn up to meetings. Draw attention to the company’s environmentally harmful practices in ways they can’t ignore and then challenge them to do something about it.
If you’re doing this, don’t let the company fob you off with vague responses.
Ask for specific actions and follow up on whether they’re carried out. Encourage other shareholders to do the same.
Make sure that the company understands that environmental ethics doesn’t run counter to the interests of its stakeholders – it is among the interests of those stakeholders.
You can even apply pressure to companies that you’re not invested in.
By buying greener products, such as renewably produced energy, you encourage the companies that produce them.
And by writing to polluting companies to let them know you’re ditching them, and why, you can nudge them towards change to win customers back.
Talk to Politicians
Politicians are interested in the views of investors.
They are constantly shaping policy around how they think investors will behave, what they will and won’t accept. But much of this is based on assumption, not things that have actually been said.
Contact local politicians, let them know that you’re an investor with environmental concerns, and let them know that you’re happy for them to punish polluting businesses and support green ones. Let them know that green taxes won’t chase your money away.
Saving the world will need institutional change, and politicians need backing to give them the courage to buck accepted wisdom and bring in tighter regulations.
Being an investor gives you influence over companies, politicians, and the wider world. By using it responsibly, you can make a difference.
Paul Connolly
Paul Connolly has been a journalist for more than 20 years, as a reporter and editor for Argus Media, Reuters, The Times, Associated Newspapers and The Guardian. He has covered Islamic Finance for Reuters in the 1990s. Paul has since helped launch three newspapers, as well as reported from Tokyo, Los Angeles and Stockholm.
