Celebrating climate action on Earth Day
Electric vehicles, precision farming and energy storage solutions are among an expanding collection of investment opportunities related to the world’s rising demand for low-carbon technologies and other climate change mitigation strategies. istock.com
Investing in clean economy champions
At face value, Earth Day offers an opportunity to reflect upon both the wonders of nature and the critical need to address challenges that threaten the very ecosystems upon which all life depends.
Viewed through a lens of opportunity, however, the latter quest presents significant potential to fuel much-needed innovations and reap financial rewards from commercial solutions required to achieve a low-carbon future, says one of Canada’s high-profile investment experts. “It’s about taking advantage of the opportunities that present themselves to investors globally,” says Purpose Investments founder and CEO Som Seif. “Important structural investments will be required for innovation and for supporting the businesses that are truly going to make the leap and bring about the changes our society needs.”
Purpose Investments’ Global Climate Opportunities Fund (CLMT) will tap into – and help to accelerate – the current trend that sees consumers and investors favouring companies that prioritize the triple bottom line of people, planet and profit, says Greg Taylor, chief investment officer at Purpose Investments. “We’re looking at a growth portfolio. We expect that there’s going to be capital appreciation out of the companies that are doing this right.”
As the world is shifting towards a low-carbon economy, businesses need to make changes to avoid falling behind the curve, he explains, and leading organizations are in the position to “becoming the growth companies of the future.”
The fund, which will be launched April 27, will include established companies with a track record for organizational change – as well as startups that are just ramping up their R&D efforts – in order to capture real opportunities for investors, explains Taylor. “Our intention is to be broad rather than exclusionary. We don’t want to focus on only electric vehicle companies, for example.”
One of the reasons for this broad approach is that climate action has to happen across sectors and across all segments of society. Another reason comes from the exciting developments in Canadian technology and innovation that are happening in multiple fields.
“We’re seeing different sectors
where Canada is really at the forefront,” says Seif. “Some of the industries that have to make the biggest leaps, such as energy and agriculture, for example, can draw on the world-leading historical knowledge and expertise that exist across the country.”
Examples of game-changing Canadian innovations come from hydrogen technologies and precision agriculture. Efforts in the development of energy transition opportunities and energy efficiency, clean transportation (like electric vehicles) and waste reduction and water treatment also present exciting opportunities. An area that is especially worth watching is energy storage, according to Taylor.
“We want to look at investing in the entire journey. From now until we get to carbon neutral.
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“Battery technology is going to be more and more important for many applications; for example, for bringing more renewables online. I think the next multi-billion-dollar company is going to come out of the battery space,” he says. “There are some really smart innovations coming out of Canada that are going to be adopted across the globe.”
ESG parameters are an important component of the decision-making framework, yet environmental impact is only one aspect Purpose Investments considers when evaluating whether companies are a good fit for the Climate Fund, notes Seif. “We are looking at different verticals to find the companies that are able to add value. They also need to have good business plans and valuations.”
Due to the dynamic nature of the space, “it has to be an active fund,” adds Taylor. “You have to do your research and make sure you’re not just buying into a scheme that’s never going to make money. With a space that will change a lot over the next few years, you want to be flexible and take advantage of opportunities when you see them.”
Purpose Investments leverages an understanding of how to form capital in sectors that are key for the clean economy transition, notes Taylor. “We know the leadership, global distribution and developments – and that’s where we aim to contribute to the companies that have the potential of becoming global success stories.”
While there is growing awareness about the need to focus investments for enabling meaningful change, the approach has to take not only the end goal but also the journey into account, believes Seif.
“Most people think that we should stop using things that are associated with high carbon emissions, but a shift to 100 per cent clean energy, for example, is not going to happen overnight,” he says. “So the only way we can truly change is to find ways that allow society to continue to flourish while supporting innovation and investments that help to reduce our impact on the environment.”
What’s more, many investment strategies only look at the current carbon footprint of companies, rather than also considering their will and power of transformation.
“We want to look at investing in the entire journey,” says Seif. “From now until we get to carbon neutral.”
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