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Corporate America, meanwhile, is also moving forward on climate adaptation. They just call it something else. “A lot of companies don’t use the term for fear of alienating conservative employees and investors,” says Joyce Coffee, who advises Fortune 500 companies on environmental issues for Edelman, the world’s largest public relations firm. “They label these investments under standard terms like ‘risk avoidance’ or ‘continuity panning,’ but everyone knows it’s all climate related. Major companies used to fear climate change because they thought it meant new regulations. Now they see it is a direct fiscal threat. Any company with a supply chain is thinking about how to avoid climate disruption.”
And pull down maximum climate profits. Predictably, an investment boomlet has emerged seeking to profit from the coming crunches in potable water and arable land. As Bloomberg reports, the scene is crawling with creatures of finance seeking fortunes by creating and cornering regional water markets, trading weather-related derivatives, and landing humongous government contracts in what the UN estimates may soon be a $130 billion adaptation engineering and construction industry. “Not enough people are thinking long term of [water] as an asset that is worthy of ownership,” said one investor. Another, bullish on the future value Australia’s fast dwindling patches of fecund soil, told the magazine, “There is an overemphasis of [climate change’s] negative impacts.”
For those dreaming of climate fortunes, there’s no better first stop than the Notre Dame Global Adaptation Index. Since being seeded by the Dallas-based oil and gas equity firm Natural Gas Partners Energy Capital Management, the Index has helped investors “measure the rate of return” in countries in need of adaptation-related loans and projects. Although recently moved to Notre Dame, the Index remains heavily funded by the Natural Gas Partners Foundation, an arm of NGP Capital Management and its $11 billion portfolio spanning every stage of oil and gas production.
Investors seeks way to profit from global warming
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Investing in climate change used to mean putting money into efforts to stop global warming. Morgan Stanley (MS), Goldman Sachs (GS), and other firms took stakes in wind farms and tidal-energy projects, and set up carbon-trading desks. The appeal of cleantech has dimmed as efforts to curb greenhouse gas emissions have faltered: Venture capital and private equity investments fell 34 percent last year, to $5.8 billion, according to Bloomberg New Energy Finance.
Now some investors are taking another approach. Working under the assumption that climate change is inevitable, they’re investing in businesses that will profit as the planet gets hotter. (The World Bank says the earth could warm by 4C by the end of the century.) Their strategies include buying water treatment companies, brokering deals for Australian farmland, and backing a startup that has engineered a mosquito to fight dengue, a disease that’s spreading as the mercury climbs.
