Red, Green, and Blue

It’s true that the global financial community is reeling from a number of hard knocks, some of them well-deserved, and it’s true that many of us are paying the price for insanely optimistic lending to those who had no hope of ever paying it back – but this is the time when changing investment behaviours could deliver a real change, a global change. And one simple policy headline could deliver just about everything that the sustainability community has been asking for. All it takes is a ruling about investments.

High Carbon Still Rules for Investors

The big players still seem to have enough money to invest in high-carbon-emitting projects such as the Alberta Tar Sands extraction scheme in Canada, but where is the equivalent private finance for low-carbon industries and clean technologies? The return on investment in even the most blue-sky clean technology programme, such as The Saijo City water-waste system which uses wasted heat from a local steel factory and water from the city’s famed underground spring to produce cooled water to irrigate the city’s strawberry crop, would definitely have exceeded the return (ha ha) on the sub-prime lending market, even if the dividend had to be paid in jam!

So what’s the problem? Perhaps it’s the very simplicity of clean technology low-carbon projects that makes them unappealing – when even the most technology illiterate investor can see the potential problems with a scheme, it’s easy for them to become risk averse. On the other hand, the complexity of short-selling and inter-bank lending is so labyrinthine that nobody seems to understand it, or know where to pin the blame when things go wrong – which is understandably appealing if you’re an investment advisor!

Could Mutual Funds Save the Planet?

So perhaps we need a new definition of risk, which encompasses some of the lessons we’ve all learned recently: that risk analysis shouldn’t be left to ‘expert financiers’ and that returns on investments are not just financial. And that’s where governments come in - a government policy that insisted on a low-carbon project being included in every unit trust or mutual fund, would put real power behind clean-tech research – and let’s be honest, it can’t possibly be a worse bet than the ones that have been made in the last few years, can it?

Japanese strawberry farm courtesy of Ehnmark at Flickr under a Creative Commons Licence

Tweet This Post

You might also like: