Finally, investment into climate change solutions can stand up to financial scrutiny. They are typically long term and inflation-linked. Most climate change solutions are infrastructure projects and are often incorrectly categorised as part of the private equity industry.
Mercer, a global investment consultancy firm, recently conducted a study into the characteristics of future investors and how many will take on a climate-aware role. These investors will realise the potential of renewable energy to shape our future and that major financial markets will cease to be dominated by the giants of the oil and fossil fuel industries. Moreover, these investors will be more likely to be influenced by investment decisions they make at home: for example, those who can see the benefits of solar PV on their roof, may also see potential in solar PV projects at scale.
‘Future-maker’ investors are on the rise in France, with the government recently calling on institutional investors to disclose the carbon intensity of their investment portfolios. This level of engagement and awareness could be generated in the UK ahead of the COP22 conference.
With the historic Paris agreement signed and the COP22 conference ahead of us, the next six months are certainly brimming with anticipation and promise for renewable energy. However, the lead-up will also be pivotal in educating the financial markets on the strong part they have to play in the fight against climate change, and in engineering the low carbon economy of the future.
Louise Ward is investment strategist at Low Carbon
