Investors Embrace Climate Change, Chase Hotter Profits

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http://www.bloomberg.com/news/2013-03-07/investors-embrace-climate-change-chase-hotter-profits.html


The costs of adapting to climate change may reach $130 billion a year by 2030, creating opportunities for a host of investors. Photos: Getty Images

Investing in climate change used to mean financing the fight against global warming. Morgan Stanley, Goldman Sachs Group Inc., and other firms took stakes in wind farms and tidal-energy projects, and set up carbon-trading desks.

Then, as efforts to curb greenhouse-gas emissions faltered, the appeal of clean tech dimmed: Venture capital and private- equity investments fell 34 percent last year, to $5.8 billion, according to Bloomberg New Energy Finance.

Now the smart money is taking another approach: Working under the assumption that climate change is inevitable, Wall Street firms are investing in businesses that will profit as the planet gets hotter.

The World Bank said in November that the planet is on track to warm by 4 degrees Celsius by the end of the century, and risks “cataclysmic changes” as a result. Rising seas threaten floods in cities from Mexico to Mozambique; heat waves menace crop yields in India, the U.S. and Australia; and warming oceans may destroy coral reefs, it said.