How Investors are Looking for Ethical Opportunities

Thu, Oct 25, 2012


Companies all across the world are now beginning to make significant changes in order to be more environmentally responsible. Global warming is an increasing problem, and is now widely recognised. As a result, governments are putting pressure on industries to change the way they operate. It’s taking a long time for everyone to catch up, but now the financial services industry is recognising that investors are keen to know how their money is being used, and where their returns are coming from.

Many investors are opposed to the idea that their investment could be used for environmentally damaging purposes. It is fast becoming popular for investments to be not only profitable, but green too. Investments cover such a huge range of opportunities however, that it’s incredibly difficult to work out what is ethical and what isn’t. This is why many investors are turning to consultants who can help them manage an environmentally friendly portfolio. To some extent, managing successful ethical investments is a balancing act.

There are distinct financial benefits associated with ethical investing. The Kyoto Protocol in 2005 introduced the idea of using carbon credits, known as CERs, or EUAs. These credits allow a company to emit one tonne of carbon dioxide into the atmosphere, and the idea is that companies will be discouraged from paying the price to pollute the atmosphere. Fortunately for investors, these credits have become hot property, and have actually tripled in value since they were first introduced. They are an ideal product to buy, sell and speculate on, while encouraging businesses to be conscious of their emissions.

The carbon market is becoming extremely important. The top quarter of FTSE100 companies are now actually carbon-neutral, and actively trade carbon credits in order to boost their green credentials. There are two main reasons for this. Firstly, companies recognise the need to be sustainable in order to secure their future, and secondly, the brand is strengthened because it shows that the company is responsible. Investors aim to take advantage of this.

Access to carbon credits is not normally available to retail investors, which is why many individuals are seeking out investment management companies that can supply them with this route of investment. Not only are emissions an ideal product to invest in because they support the environment, but they can be extremely profitable because they are extremely liquid; there is consistently high demand for them.

In addition to CERs, there are significant incentives for those wishing to further emissions regulations in less developed countries. The idea is that developed nations, and therefore individuals from those countries, should invest in projects which are better for the environment. In return, businesses are awarded CERs, meaning there is a constant supply.

Oakmount Partners are an ideal choice for individuals looking for ethical investment opportunities. They can help those looking to invest in products such as CERs. In addition to this, Oakmount & Partners offer carbon management, which means they will help businesses reduce their emissions.

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