For some investors, the time for spending huge sums of money to stop climate change has passed. It’s happening. Now, working under the assumption that significant change is inevitable, some firms are investing in businesses that stand to profit as the climate warms. Bloomberg Businessweek reports.
Companies such as Morgan Stanley and Goldman Sachs have purchased stakes in alternative energy projects including wind farms and tidal energy plants; they also set up carbon-trading desks. But now that efforts to curb greenhouse gas emissions in a major way have largely faltered, the appeal of investing in cleantech firms and carbon offset schemes has dimmed.
The costs of adapting to climate change may reach $130 billion a year by 2030 -- bad news for many of us, but good news for investors who foresee opportunities. Here are some companies looking to capitalize on the planet's warming trend.
Drought and abnormal weather can help spur business.
- Water Asset Management buys water rights and makes investments in water treatment companies. “Not enough people are thinking long term of [water] as an asset that is worthy of ownership,” says Chief Operating Officer Marc Robert. The New York hedge fund has about $400 million under management.
- Switzerland-based Land Commodities advises individuals and funds on purchases of Australian farmland, which could become more valuable as arable land becomes more scarce. According to the firm’s pitch, inland cropland Down Under is far from rising seas yet close to Asia’s hungry customers. The Switzerland-based company worked on more than $80 million in transactions last year.
- New York-based investment firm KKR bought a 25 percent stake in Nephila Capital, an $8 billion Bermuda hedge fund that trades in weather derivatives. “More volatile weather creates more risk and more appetite to protect against that risk,” says Barney Schauble at Nephila Advisors.
- Arcadis is a Dutch engineering firm that offers flood-protection services. Their revenue was up 26 percent last year to $3.25 billion thanks in part to superstorm Sandy. The company has contracts with New York’s Nassau County and New York City to bring water treatment facilities back online. Arcadis recently bought ETEP, a Brazilian water engineering and consulting firm.
With glaciers disappearing, there’s suddenly access to a lot of ground that no one has ever seen.
- NunaMinerals, a mining company in Greenland, spent last summer prospecting for gold in the southern part of the island. Mining companies spent $91.5 million on mineral exploration in the Danish territory in 2010.
- Additionally, Anglo-American and Danish mining startup Avannaa Resources have committed more than $15 million on a joint venture to explore for copper in the eastern part of Greenland.
Hotter temperatures and increased humidity are leading to outbreaks of the mosquito-borne disease dengue. There were 66 cases in the Florida Keys in 2011.
- ‘Eco-entrepreneur’ Jason Drew is one of the investors who has bet about $30 million on Oxitec, a startup in England that has engineered a mosquito that can’t reproduce. When their transgenic mosquito mates with a wild female, their offspring don’t survive into adulthood.
[From Bloomberg Businessweek]
Image: J. Fang