Carbon Challenge

Investing in Green? Don’t Buy the Hype

Geoff Cutmore|CNBC Anchor

Can you cash in on climate change? Barely a day passes it seems without a new green fund launch, or another ETF bundling together a collection of stocks in companies that have green credentials.

Wind, solar and biofuel have all enjoyed mini-booms and busts in the last few years as the prevailing "wisdom" has become convinced they are:

a) The silver bullet in the climate debate
b) Overvalued
c) Just a rotten idea whose time has yet to come.

There are other derivatives of the same arguments, but you get the picture.

The focus on making money as an investor in the green debate remains a niche theme, albeit one that has grown tremendously as more green centered companies have emerged and some mainstream businesses have sought to capitalize on the subject. At a minimum, nearly all blue-chip companies now have a position on the climate change story, regardless of whether they are a large emitter or not.

All stuff and nonsense says hedge fund manager Hugh Hendry in his typically combative style:

"I don’t buy all this green stuff! I see it as the moral conscience of an overleveraged society that sensed there was something wrong with all this paper wealth."

Hendry says the behavior we have seen so far surrounding the issue has been anchored in society’s own perception of its prosperity. When fortunes change, and remember he thinks we are all going to get a lot poorer as the leverage continues to be unwound, then so will the attitude towards climate change.

"When people are rich they want to live forever; hence save the planet," he said. "But make them poor and I don’t see people desperate to pay over the odds. And wait until the lack of cheap coal power means that poor grannies cannot afford to heat their homes because the rich bankers want to save themselves/ the planet with very expensive wind power."

Whether you are sympathetic with Hugh’s view or not, the sector is attracting money, and according to James Cameron, at Climate Change Capital, the range of investable assets on offer has never been greater.

Cameron also insists that the public policy debate has shifted very clearly in favor of growth in green technology. He argues that private and institutional investors can now build a portfolio of balanced funds that exploit the drive to reduce greenhouse gas emissions.

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Cameron says a mix of investments in long term infrastructure programs, like smart grids, and shorter-term renewable breakthroughs offer the potential for long term, stable, returns. And for the most risk averse, there are now bonds with a green character that promise steady fixed income type returns.

The big fear for many investors is that public policy will shift, thereby undermining the investment rational. Cameron thinks President Obama’s clear commitment to the process of finding a replacement for Kyoto signals the opportunity will only grow to make money out of this theme.

Have you made money investing in green? Or do you believe its fools gold? Let us know your views or experiences at